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PALGRAVE STUDIES IN THE HISTORY OF ECONOMIC THOUGHT
Richard F. Kahn
Collected Economic Essays
Richard F. Kahn
Edited by
Maria Cristina Marcuzzo · Paolo Paesani
Palgrave Studies in the History
of Economic Thought
Series Editors
Avi J. Cohen
Department of Economics
York University & University of Toronto
Toronto, ON, Canada
G. C. Harcourt
School of Economics
University of New South Wales
Sydney, NSW, Australia
Peter Kriesler
School of Economics
University of New South Wales
Sydney, NSW, Australia
Jan Toporowski
Economics Department
SOAS University of London
London, UK
Palgrave Studies in the History of Economic Thought publishes contribu-
tions by leading scholars, illuminating key events, theories and individuals
that have had a lasting impact on the development of modern-day eco-
nomics. The topics covered include the development of economies, insti-
tutions and theories.
The series aims to highlight the academic importance of the history of
economic thought, linking it with wider discussions within economics and
society more generally. It contains a broad range of titles that illustrate the
breath of discussions – from influential economists and schools of thought,
through to historical and modern social trends and challenges – within the
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All books in the series undergo a single-blind peer review at both the
proposal and manuscript submission stages.
For further information on the series and to submit a proposal for con-
sideration, please contact the Wyndham Hacket Pain (Economics Editor)
wyndham.hacketpain@palgrave.com.
Editors
Maria Cristina Marcuzzo • Paolo Paesani
Richard F. Kahn
Collected Economic Essays
Editors
Maria Cristina Marcuzzo Paolo Paesani
Department of Statistical Sciences Department of Economics and Finance
Sapienza University of Rome University of Rome Tor Vergata
Rome, Italy Rome, Italy
We are grateful to Palgrave Macmillan, Wiley and The Royal Economic Society,
the American Economic Association, the Banca Commerciale Italiana, Europa
Publications for the Institute of Bankers, Allen and Unwin, Lloyds Bank Review,
and the Scottish Economic Society, for permission to republish these essays.
ISSN 2662-6578 ISSN 2662-6586 (electronic)
Palgrave Studies in the History of Economic Thought
ISBN 978-3-030-98587-5 ISBN 978-3-030-98588-2 (eBook)
https://doi.org/10.1007/978-3-030-98588-2
© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
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Praise for Richard F. Kahn
“Richard Kahn is of great interest to historians of economics because of his role at
the centre of two of the central developments in economics in the 20th century:
imperfect competition and the Keynesian revolution. This collection, including an
important, previously unpublished paper from 1933, and the very helpful editorial
introduction successfully illustrate the evolution of Kahn’s thinking from the
1930s to the 1970s.”
—Roger E. Backhouse, University of Birmingham
and Erasmus University Rotterdam
“A long-awaited second collection of Richard Kahn’s essays including his later

reflections on Keynes and analysis of the postwar international economy and prob-
lems of unemployment and inflation – accompanied by an excellent introduction
by the editors. An important contribution to the history of economics.”
—John B. Davis, University of Amsterdam and Marquette University
“This valuable and fascinating collection documents Richard Kahn’s central role in
the imperfect competition and Keynesian revolutions in economics, making con-
veniently accessible his articles on imperfect competition, on Keynes, and on infla-
tion and unemployment, including a pathbreaking 1933 paper on imperfect
competition previously published only in Italian translation. The helpful and infor-
mative editorial introduction provides a useful guide to the nature and importance
of Kahn’s contributions. Every economist interested in the imperfect competition
and Keynesian revolutions should have this book.”
—Robert W. Dimand, Brock University
Contents
1 Introduction 1
Part I Imperfect Competition 33
2 Imperfect Competition and the Marginal Principle 35
3 The Problem of Duopoly 51
4 Oxford Studies in the Price Mechanism 71
Part II Keynes 85
5 The Cambridge ‘Circus’ 87
6 Some Aspects of the Development of Keynes’s Thought 97
7 ‘The General Theory of Employment, Interest and Money’119
vii
viii Contents
Part III International Money and Trade 161
8 International Regulation of Trade and Exchanges163
9 The International Monetary System179
10 Historical Origins of the International Monetary Fund191
Part IV Unemployment and Inflation 223
11 Unemployment as seen by the Keynesians225
12 Thoughts on the Behaviour of Wages and Monetarism241
13 Inflation—A Keynesian View253
List of Richard F. Kahn’s Publications261
Index273
Sources
1. (1933). Unpublished.
2. (1937). Economic Journal, 47(185), 1–20.
3. (1952). Economic Journal, 62(245), 119–130.
4. (1985). In G. Harcourt (Ed.), Keynes and His Contemporaries
(pp. 42–51). London: Macmillan.
5. (1978). Journal of Economic Literature, 16(2), 544–559.
6. (1984). In R. F. Kahn, The Making of Keynes’s General Theory
(pp. 119–168). Cambridge: Cambridge University Press.
7. (1952) In Banking and Foreign Trade (pp. 1–18), Lectures delivered
at the Fifth International Banking Summer School, Oxford, July.
London: Europa Publications for the Institute of Bankers.
8. (1973). American Economic Review, 63(2), 181–188.
9. (1976). In A.P. Thirlwall (Ed.), Keynes and International Monetary
Relations (pp. 3–35). London: Macmillan.
10. (1976) In G.D.N. Worswick (Ed.), The Concept and Measurement of
Involuntary Unemployment (pp. 19–33). London: Allen and Unwin.
11. (1976). Lloyds Bank Review, 119, 1–11.
12. (1976). Scottish Journal of Political Economy, 33(1), 11–16.
We thank Prof. D. Papineau, Richard Kahn’s nephew and literary executor,

for granting permission to publish the essay “Imperfect Competition and
the Marginal Principle”.
ix
x Sources
The essays of this collection have been reproduced without alteration from
the original text, except for few minor corrections of typos and oversights.
Spelling, quotation marks, italics, underlines, punctuation and biblio-
graphic reference system have been left as they were in the sources, even if
inconsistent among t hemselves. Only notes have been always reproduced
as consecutively numbered footnotes within each essay.
CHAPTER 1
Introduction
Maria Cristina Marcuzzo and Paolo Paesani
The first collection of Richard Kahn’s essays was published by Cambridge

University Press (Kahn 1972). It contains, among other texts, the article
on the multiplier (Kahn 1931), the essay on liquidity preference (Kahn
1954) and the Memorandum to the Radcliffe Committee (Kahn [1958]
1972). Taken together, these essays provide a broad but incomplete pic-
ture of Kahn’s scientific output. Kahn himself hoped for a second collec-
tion of his writings. It is this wish, communicated to Maria Cristina
Marcuzzo at the end of the 1980s, that lies behind this volume. The essays
Our heartfelt thanks go to Iolanda Sanfilippo for her excellent editorial assistance
in preparing this collection of essays.
M. C. Marcuzzo (*)
Department of Statistical Sciences, Sapienza University of Rome, Rome, Italy
e-mail: cristina.marcuzzo@uniroma1.it
P. Paesani
Department of Economics and Finance, University of Rome Tor Vergata,
Rome, Italy
e-mail: paolo.paesani@uniroma2.it
© The Author(s), under exclusive license to Springer Nature 1

Switzerland AG 2022
M. C. Marcuzzo, P. Paesani (eds.), Richard F. Kahn,
Palgrave Studies in the History of Economic Thought,
https://doi.org/10.1007/978-3-030-98588-2_1
2 M. C. MARCUZZO AND P. PAESANI
collected here, one of which hitherto unpublished in English,1 represent a

selection of those Kahn himself indicated to her and focus on four areas:
the theory of imperfect competition, Keynes and the Keynesian revolu-
tion, the regulation of international trade and finance and analysis of the
link between inflation and unemployment.
Accordingly, the present collection is divided into four parts, as indicated
above, within which the essays are generally presented in the chronological
order in which they were written; thus the reader is able not only to follow
the evolution of Kahn’s thinking over time, but also to grasp the overall
coherence of his approach. One of the purposes of this introduction is to
reconstruct the context in which the articles chosen for this collection came
out, bringing to light the network of professional and personal relationships
in which Kahn’s thought developed and making explicit the problems and
questions to which he sought solutions and answers. We have therefore used
all those fragments of knowledge, also drawn from unpublished works and
correspondence (see Marcuzzo and Rosselli 2005), that were helpful in
placing these writings in their context.
The second purpose, in fact, is to show just how relevant these writings
are to contemporary economic theory and policy. Nowadays, the focus on
power relations and strategic interaction between the actors concerned
on the labour market—central to Kahn’s thinking about inflation and its
nexus with unemployment—is recognized as essential to mainstream and
heterodox approaches alike. It is not a matter of re-proposing the Phillips
curve, which Kahn refuted together with too sharp a distinction between
cost-push and demand-pull inflation (Cristiano and Paesani 2018a), but
of drawing attention to the crucial role, in determining inflation and
unemployment, played by the institutions that determine nominal wages
and regulate conflicts between employers and employees at the sectoral
and aggregate level. The sectoral dimension also matters insofar as local-
ized shortages in raw-materials or semi-finished products can trigger cost
and price spikes that spill over across the economy. These elements bring
attention back to the supply-side causes of inflation and their interaction
with demand. Recent debates on the “end of inflation” in connection with
globalization, diminished trade union power on wages and the role of
1
The essay was published in Italian in Kahn (1999) edited by M.C. Marcuzzo in which a
selection of Kahn’s papers were also translated. For an overall view of Kahn’s contribution,
see also Marcuzzo (2011).
1 INTRODUCTION 3
sectoral demand and supply factors in triggering inflation are all indicative
of the relevance of this approach.
A second aspect that makes Kahn’s thought topical is the reappraisal of
Keynes’s contribution to economic theory and policy, with regard both to
the employment-wage-price nexus and to the more general issue of uncer-
tainty as an obstacle to maintaining high living standards and full employ-
ment. Over the last fifteen years, the global economy has suffered very hard
blows, from the global financial crisis in 2007–2009 to the Covid-19 pan-
demic. Events of such magnitude compel economists and policymakers to
forge new models and new tools to deal with the far-reaching and often
unforeseen consequences of global shocks. In the current context of high
uncertainty, the name of Keynes is again resounding loud and clear thanks
to his approach to economic problems with its mixture of creativity, willing-
ness to experiment with new policy instruments and optimistic commitment.
Following in Keynes’s footsteps, but bringing his own personal views,
Kahn analysed international economic problems in the field of trade and
finance. The articles collected here obviously reflect the historical context
in which they were produced. Nonetheless, they are worth re-reading
today for their constructive spirit, more than fifty years after the end of the
Bretton Woods regime, whose origins Kahn recounts, and at a time when
the international economic institutions are struggling to maintain an
acceptable international economic order.
The economic and financial problems that many economies, at differ-
ent stages of economic development, face today are partly due to contin-
gent factors and partly to structural reasons. In this context, it is hardly
deniable that in many crucial sectors, including information technology,
distribution and finance, oligopoly and imperfect competition are the
norm rather than the exception. We start from this topic in our explora-
tion of Kahn’s thought.
Competition Theory: Market Imperfections

and Entrepreneurial Behaviour
Kahn’s role in the elaboration of the theory of imperfect competition,

with its development into the theory of oligopoly, is perhaps not suffi-
ciently recognized. Indeed, Sraffa’s suggestion in his 1926 article to
“abandon the path of competition and turn in the opposite direction,
towards monopoly” (Sraffa 1926, p. 542) was initially pursued by the then
23-year-old Kahn, who made it the focus of his first research activity. In
the academic year 1928–1929, Kahn had attended Sraffa’s lectures
(“Advanced Theory of Value”), in which the subject of market imperfec-
tion was addressed along very similar lines to the 1926 article.2 In the
same year Kahn took G. Shove’s course “Economic Theory”,3 a consider-
able part of which was devoted to “market imperfections”.
It is hardly surprising, therefore, that in the Preface to the Fellowship
Dissertation, which Kahn wrote between October 1928 and December
1929, there is ample recognition of these two economists. Nor is it sur-
prising that the Dissertation, because it remained unpublished for almost
fifty years4 and because of its title, The Economics of the Short Period, which
did not explicitly allude to market imperfection, did not fully reveal the
importance of Kahn’s contribution to the emergence of the theory of
imperfect competition.
In the established textbook tradition, it was the books by Joan Robinson
and E. Chamberlin that were indicated as the initiators of that line of
analysis. And even Joan Robinson, in spite of her close collaboration with
Kahn in writing The Economics of Imperfect Competition (Robinson [1933]
1969), did not get round to reading Kahn’s Dissertation until January
1933,5 when her book was in draft form. On the other hand, Kahn had
been in correspondence with Chamberlin, to whom he had sent the duo-
poly part of the dissertation for him to read it, since 1930.6 The discussion
with Kahn resumed in the days when The Economics of Monopolistic
2
Sraffa’s Lectures are in the Sraffa papers, Trinity College Library, Cambridge, and are
now available online (SRAF/D/2/1). We also have the notes taken by Kahn and his essays
written for the course in the Kahn papers, King’s College Library, henceforth given with the
catalogue reference number (RFK/3/3/359–84).
3
Of Shove’s course, we are left with the notes taken by John Saltmarch in his academic year
1928–1929. See in particular the section entitled “Partial or Conditional Monopoly”. For a
discussion of Shove’s role in the development of the theory of imperfect competition, see
Carabelli (2005).
4
The Dissertation was first published in Italian in 1983, with an Introduction by M. Dardi
(Kahn 1983), and then in English in 1989 (Kahn 1989).
5
See the letter from Joan Robinson (henceforth JVR) to Richard Kahn (henceforth RFK)
of 24.1.1933 (RFK papers, 13/90/1/75).
6
See E. Chamberlin’s letters to RFK of 3.8.1930 and 12.9.1930 in RFK papers,
1/13/19–25, and Chamberlin (1961, p. 513n).
1 INTRODUCTION 5
Competition was about to be published, in February 1933, when Kahn

was visiting Harvard.7
The main interest of the Dissertation lies in the explanation of why, in
a depression, all the firms in an industry work part-time—shutting down
their plants for some days and working at full capacity on others—and not
the situation predicted by the assumption of perfect competition, i.e. that
some firms (the most inefficient) are forced to shut down their plants,
while the others (the most efficient) continue to work at full capacity. The
key to Kahn’s explanation lies in the analysis of quasi-fixed costs and prime
costs (i.e. the difference between total and quasi-fixed costs), both being
relevant in the short run. If firms work full-time only some days (shutting
down plants on the other days), as was the case with the British cotton
industry in the depression of the 1920s, it must mean that this method
was the most advantageous for maximizing profits or minimizing losses.
This means that the average prime cost has a particular pattern, i.e. it is
constant up to the point corresponding to full capacity, at which it becomes
infinite. But the inverted L-shape of the short-run average (and marginal)
prime cost curves means that, if the assumption of perfect competition is
maintained, i.e. the assumption of a perfectly elastic demand curve for the
firm, the price and quantity produced by the individual firm are deter-
mined at the level of full capacity utilization. If, on the other hand, the
assumption of imperfect competition is introduced, i.e. each firm faces its
own particular market and thus a negatively sloped individual demand
curve, the equilibrium level of output may be lower than the level of full
capacity utilization.
But in what respects is the contribution of the Dissertation innovative?
In his Principles, Marshall had addressed the problem of determining
monopoly equilibrium with the concept of the maximum monopoly rev-
enue (Marshall 1964, p. 704), which is the point at which the price differ-
ence between the supply and demand curves multiplied by the level of
production is maximized. Marshall’s solution, although identical to that
7
RFK to JVR, 9.2.1933 (RFK papers, 13/90/1/100): “I am having lunch with
Chamberlin, whose book on Monopolistic Competition is just about to come out, in fact in
two days”. JVR’s letter to RFK, dated 3.3.1933 (RFK papers, 13/90/1/169), is also inter-
esting, concerning the coincidence of the “discoveries” on imperfect competition in those
years: “Chamberlin’s book has turned up. Very competitively Monopolistic as Piero [Sraffa]
says. I find myself enjoying the coincidences without any base emotions, but I must not read
it thoroughly or the temptation to put in [i.e. in The Economics of Imperfect Competition]
footnotes will be too great.”
given by the equality of marginal cost and marginal revenue, was not for-
mulated in those terms, and the definition of marginal revenue was only
“discovered” in the late 1920s and early 1930s, by more than one author
working independently. Moreover, Marshall had not gone into much
depth in considering the effects of the behaviour of rival firms on the elas-
ticity of demand of a firm, or the effects of the pricing policy of a single
firm on the behaviour of rival firms. Despite Cournot’s and Edgeworth’s
work on duopoly, at the time of the writing of the Dissertation, a determi-
nate solution to the problem and its integration into a general analysis of
imperfect competition had yet to be arrived at.
Definition of marginal revenue is also absent from the Dissertation, but
there are two aspects of particular interest in comparison with the previous
literature on oligopolistic markets. The first is Kahn’s invention of a way
to measure the degree of market imperfection, under the assumption of
linearity of demand curves and average unit cost, through the “annihila-
tion coefficient” which is analytically identical to the measure that would
later become known as the “degree of monopoly” (Marcuzzo 1994).
The second aspect of interest is how the effect on the demand curves of
firms of a price change by one of them is taken into account. This is the
subject of a specific section in which Kahn also criticizes the conclusion
reached by Sraffa in his 1926 article, according to which in the case of
equilibrium in an imperfect market—i.e. in which there are many firms
each with its own individual market and hence a negatively sloped demand
curve for its product—the final equilibrium price is the one that would be
reached if the market were entirely controlled by a single monopolist.
Kahn’s position is argued on the basis of the idea that the slope of indi-
vidual demand curves reflects the assumptions each firm makes about the
behaviour of the others. Kahn shows that under any conjecture the rela-
tionship between individual and market demand curves is such that it
never gives equilibrium at the monopoly price, but at a lower price and
consequently at a larger quantity than would be chosen by a monopolist
under the same technical conditions (Kahn 1989, p. 117).
The point of contention between Kahn and Sraffa revolves around the
different way of conceiving the response of the competing firms in the
presence of a price increase by one of them (on this, see Marcuzzo 2001).
Kahn focuses on a subjective element, namely the conjectures that each
firm makes about what its competitors will do if it decides to raise its price.
Sraffa focuses on an objective element, the upward shift in the demand
curves of competing firms in the presence of a price increase by one of
them (substitution effect). According to Kahn, the fear of losing
1 INTRODUCTION 7
customers to competitors leads each firm to move along a flatter demand

curve than we would observe if the firm operated under pure monopoly
conditions. At the market level, this leads to a higher equilibrium quantity
than would be the case in a monopoly and a lower price. According to
Sraffa, the general increase in prices by all firms leads consumers to reduce
their demand (resulting in a reduction of the individual and collective
elasticity of demand) without abandoning their trusted supplier. Price
increases and quantity reductions stop at the same point where they would
stop in the case of a monopoly.
We have focused on the Dissertation because this work clearly identifies
the two fundamental questions that arise once the hypothesis of perfect
competition is abandoned: (i) if firms no longer take as given the price as
they do in perfect competition but decide it, how will they take into
account the behaviour (reactions) of other firms? (ii) is pursuit of maxi-
mum profit also in this case the best description of the firm’s behaviour?
The three articles we have chosen for this part of the collection,
“Imperfect Competition and the Marginal Principle” (Chap. 2,
Kahn 1933), “The Problem of Duopoly” (Chap. 3, Kahn 1937), and
“Oxford Studies in the Price Mechanism” (Chap. 4, Kahn 1952a), repre-
sent successive stages in the evolution of Kahn’s thought and the literature
that developed on the subject at the same time, but they have in common
the identical approach to answering these two questions.
Of the first essay we know that Kahn took it with him on his trip to the
United States, which began in December 1932 and ended in April 1933.
On the evidence of a particular detail we can date the completion of this
draft to a few weeks before his departure from England,8 while it is more
difficult to date its beginning. The Dissertation was completed in
December 1929 and soon after Kahn began working with Keynes on the
Treatise on Money, which was published in October 1930 (Keynes [1930]
1971b). In the months immediately following, Kahn was busy discussing
and exploring the issues raised by Keynes not only in the Treatise on Money,
but also in Can Lloyd George Do It? (Keynes [1929] 1972). In the same
months Kahn began to work on a book he had planned, with the same
title as the Dissertation, which remained unfinished.9
8
In the text reference is made to Robinson’s book under the title The Monopoly Analysis of
Value, which was only changed to the definitive one, The Economics of Imperfect Competition,
in January 1933. See JVR’s letter to RFK of 24.1.1933.
9
This unpublished book can be found in Kahn’s archives (RFK papers, 2/8–2/9). On this,
see also Marcuzzo and Rosselli (2008).
The article in question was developed from what was to be Ch. VII of
the unfinished book and it is certainly the product of discussions in what
they jokingly called “The Trumpington Street School”, named after the
street where Joan and Austin Robinson—returning from India in late
1928—made their home in Cambridge and where Kahn was a frequent
visitor.10 The discussions were certainly provoked by Sraffa’s critique of
Marshallian theory and also concerned the implications of Keynes’s
Treatise on Money, which was the subject of the “Circus” meetings, as we
shall see later.
Kahn sailed on the Majestic to the United States in December 1932,
taking with him this article which was to be a summary of some of those
discussions. Over the previous two years Kahn had been working inten-
sively with Joan Robinson on solutions to various problems that had arisen
during the drafting of the Economics of Imperfect Competition.11 The most
important analytical finding presented in this text—the equilibrium “dou-
ble condition” given by the point of tangency between the average reve-
nue and average cost curves and the point where marginal revenue meets
marginal cost—had already appeared in an article by Joan Robinson, “The
Diminishing Supply Price”, published in the Economic Journal of 1932
(Robinson 1932) and later incorporated into the book which was to
become known as “Kahn’s Theorem”.12
Kahn presented his article at several conferences in the United States
and gave it to Taussig for publication in the Quarterly Journal of Economics.
However, the article was not accepted. From Kahn’s correspondence,
which among other things offers a very interesting account of the situa-
tion in the country and aspects of American academic life, we know that
Kahn reacted with characteristic modesty, and made no further attempts
to publish it.13
10
It was about this article that JVR wrote to RFK, in a letter of 11.2.1933: “Austin
[Robinson], who has yet only just glanced at it, is very keen that it should be published as
the first manifesto of the Trumpington Street School. (After reading it he repeats this view)”
(see RFK papers, 13/90/116).
11
On the cooperation between Kahn and Robinson in drafting Robinson’s book, see
Rosselli (2005).
12
“The condition of tangency between the demand curve and the average-cost curve of a
profit-maximising firm that just breaks even, Schumpeter in his 1930s Harvard lectures used
to refer to as ‘Kahn’s Theorem’” (Samuelson 1994, p. 54n.).
13
RFK to JVR, 3.3.1933: “Taussig’s refusal of my article on ‘Imperfect Competition and
the Marginal Principle’ was conducted with great candour, which I did all I could to encour-
age”. (RFK papers, 13/90/43).
1 INTRODUCTION 9
A few years later, however, he decided to publish an article, “The Theory

of Duopoly”, which was to become a classic on the subject and which earned
Keynes’ comment: “Your article is a beautiful piece of work”.14
In this article, unlike in the Dissertation, there is no room for mathe-
matics and the whole complicated discussion of the effects of the actions
of a single duopolist on the behaviour of the other and thus the role of the
strategies implicit in each move of each firm, are tackled without any
mathematical support.
As we know, Kahn is one of the inventors of the “kinked demand curve”
and in general of the introduction of “guesswork” in demand curves,
expressed in the value of elasticity, for the analysis of price and quantity
produced in a duopoly or in oligopolistic markets in general. The charac-
teristic feature of Kahn’s approach to the theory of price formation in
imperfect markets is the maintenance of the profit-maximizing assumption
as the only certain rule on which to base analysis. Contrary to traditional
marginalist analysis, Kahn had always—ever since his first unpublished
article—interpreted the hypothesis of pursuit of maximum profit of firms
as synonymous with a method “by trial and error”, rather than the expres-
sion of an optimizing rationality, and even of the entrepreneur’s use of
marginal calculus. But unlike other alternative approaches to those based
on marginal analysis, Kahn never accepted explanations of the price forma-
tion mechanism that were descriptive or based on an assumption of non-
“rational” behaviour. Without these caveats, Kahn’s highly critical stance,
in the third essay, towards theories of price formation—based on “what
entrepreneurs say they do” (Hall and Hitch 1939)—would indeed be
incomprehensible.
From a theoretical point of view, the main proponent of abandoning
the theory of perfect competition and the profit-maximizing hypothesis in
favour of a theory of price formation on the basis of a (mostly constant)
mark-up on (mostly constant) prime costs was Michał Kalecki, who elabo-
rated his theory after a study of prices, revenues and costs in some British
industries.
It was Joan Robinson who, impressed by his qualities from their first
meeting in the summer of 1936, took it upon herself, in her words, “to
blow his trumpet for him” (Robinson [1977] 1979, p. 186). Kalecki then
moved to Cambridge at the end of 1937 and the group around Keynes
found the necessary funding for his research (Marcuzzo 2020a). At the
14
J.M. Keynes (henceforth JMK) to RFK of 1.1.1935, in RFK papers, 13/57/122.
end of 1938, “The Cambridge Research Scheme of the National Institute

of Economic and Social Research into Prime Costs, Proceeds and Output”
was set up and gave Kalecki a job in Cambridge.
At the end of the first year, Kalecki presented the main results of the
research in the form of particular reports on the industries concerned (in
collaboration with Hsu and Tew) and an Interim Summary of Results of
the research in general (RFK 5/1/83–86). These reports were com-
mented on rather critically by J. Robinson (RFK papers, 5/1/163–69)
and especially R. Kahn,15 who objected to the methodology employed by
Kalecki. Shortly afterwards Kalecki resigned—although he responded
promptly to the criticism that had been levelled at him (RFK papers,
5/1/1963–169)—and left Cambridge in the late summer of 1939.16
Kahn’s aversion to mark-up pricing—in contrast to Joan Robinson’s,
who later made it her own—was reiterated by Kahn fifty years later: “I
think the concept of a horizontal short-run supply curve is an exaggera-
tion. Nor do I subscribe to the ideas … of a margin that is fixed. It clearly
varies between firms according to how different their first costs are.”17 It
is in fact interesting to compare Robinson’s later observations on the
superiority of Kalecki’s theory of price formation over Keynes’s (e.g.
Robinson [1977] 1979, pp. 188–189) with the position expressed in her
Memorandum of July 1939, which was highly critical of the usefulness of
Kalecki’s degree of monopoly:
The degree of monopoly is not “a thing in itself”. It depends on e.g. 1)

Imperfection of the market; 2) Number of Firms in the market, which may
alter (a) with technical conditions (probably important in the steel indus-
try); (b) with immediate past history of the industry; 3) Deliberate monop-
oly agreements; 4) Tacit agreement and custom of the trade, which may
alter with boom and slump; 5) Recent wage changes; 6) State of demand for
a commodity as a whole. Thus to say that there has been a “change in the
degree of monopoly” is never a final account of what has happened, and it
is often unreasonable to expect a constant degree of monopoly in face of
other changes, e.g. a change in demand. (RFK papers, 5/1)
15
RFK to M. Kalecki, 10.7.1939 (RFK papers, 5/1/149–58) and 11.7.1939 (RFK papers,
5/1/159–162).
16
M. Kalecki to RFK, 9.6.1939 in RFK papers, 5/1/146. See also Osiatynski (1991,
p. 524).
17
R.F. Kahn to R. Marris, 2.5.1987 (in Marris 1991, p. 184).
1 INTRODUCTION 11
The opposition to the concept of the “degree of monopoly”, as developed

by Kalecki, confirms Kahn’s adherence to the Marshallian approach to
price formation, based on equality between marginal revenue and rising
marginal cost, the same assumption accepted by Keynes in the
General Theory.
Employment Theory: The Keynesian Approach

and the Relationship with Keynes
Kahn was the academic economist closest to Keynes from 1930 until
Keynes’ death in 1946. At first, as Kahn himself told us, he and three other
King’s students met Keynes once a fortnight for supervision. Soon Kahn
proved to be such an outstanding student that he elicited Keynes’ enthu-
siastic comments on the essays he wrote for supervision.
To give a few examples: in the margin of an essay by Kahn of 4 November
1927, Keynes wrote: “You are really good at economics” (RFK papers,
3/3); similarly on 27 April 1928: “Excellent—an almost perfect answer”
(RFK papers, 3/3). On one occasion, just before exams, Keynes wrote to
his wife: “Yesterday, my favourite pupil, Kahn, wrote the best answer I
have ever had from a student; he must absolutely get an A”.18
And indeed Kahn lived up to expectations, coming top (First Class) in
the 1928 Economics Tripos. But when it came to choosing the subject of
his thesis to compete for a Fellowship at King’s, Keynes suggested a topic
(involving the use of the Midland Bank’s monetary statistics) that proved
impractical (due to the Bank’s unwillingness to make them public). So
when Kahn, at the suggestion of Shove and Sraffa, proposed to deal with
“short run economics”, i.e. to explain how firms in a given industry
reacted in a depression, with analysis of the type of costs and the type of
market in which they operated, Keynes—apart from providing him with
the statistics of the cotton industry—did not show much interest in the
subject. But in fact, as Kahn wrote almost fifty years later, “my work on the
short run was then to influence the development of Keynes’ thought”
(Kahn 1989, p. 21). Collaboration with Keynes resumed only after Kahn
was elected a Fellow of King’s in March 1930, again arousing the enthu-
siasm of Keynes, who wrote in his congratulatory letter to Kahn: “the
18
JMK to Lydia, 28.4.1928, in JMK papers, PP/45/190.
election went off without a hitch; everyone recognised it as an exception-

ally good thesis”.19
It was in these months that began the exchange of ideas and discussions
that, as Kahn tells us in the essay “The Cambridge ‘Circus’” (Chap. 5,
Kahn 1985), was to lead to the publication of the General Theory and in
general to the diffusion of the “Keynesian revolution”. The question of
the role of Kahn and the “Circus”—that is, of the group made up by not
only Kahn, but also James Meade, Piero Sraffa, Joan and Austin
Robinson—has given rise to very conflicting judgments in the literature.
This essay is an important personal testimony to the discussions of those
months, during which the so-called “multiplier” article, “The Relation of
Home Investment to Employment”, was conceived (Kahn 1931).
We know that the multiplier article was written between the summer of
1930—the drafting began in August during a holiday in the Tyrol (Kahn
1984a, p. 91)20—and the early months of 1931 and was published in June
of that year. The importance of the article on the multiplier lies in the fact
that it provided the framework for analysing the conditions under which
there is an increase either in the price level or in quantities (or a combina-
tion of the two) in aggregate in the face of an increase in demand (in this
case public investment in road building). The multiplier remained central
in macroeconomic models until monetarism first and subsequently the
new classical macroeconomics, emphasizing the link between consump-
tion and permanent income and Ricardian equivalence à la Barro, deter-
mined its disappearance together with the idea of a constructive role for
discretionary fiscal policy (see Marcuzzo 2014).
Kahn always insisted that his role was to help Keynes to free himself
definitively from the “stranglehold” of the Quantity Theory of Money,
contributing to the alternative approach with a fundamental tool, the
aggregate supply curve.21 However, the limitation of that still immature
formulation of an alternative approach to the “classical” one, as Kahn
19
JMK to RFK, 16.3.1930, in RFK papers, 13/57/3.
20
Among Kahn’s papers is an extract from the article, with a dedication to an unidentified
Elgar: “With the author’s heartful thanks for the cooperation and stimulus received in the
Tyrol, August 1930 and Surrey, March 1931” (RFK papers, 13/127).
21
Letter from RFK to R. Marris, 2.5.1987, in R. Marris 1991, p. 184: “Maynard derived
from me the idea of thinking in terms of the supply curves of capital goods and consumption
goods”. See also Kahn’s letter to D. Patinkin, 11.10.1978: “I claim I brought the theory of
value into the General Theory in the form of a concept of the supply curve as a whole and
that this was a major contribution” (Patinkin 1993, p. 659).
1 INTRODUCTION 13
himself later acknowledged, was that he had not clarified the fundamental
implication of the “multiplier”, i.e. the necessary equality of savings and
investment. Kahn attributed this difficulty to the fact that the article
moved within the definitions of savings and income in the Treatise on
Money; only after the “discovery” of the principle of effective demand did
it become clear that those particular definitions had to be abandoned
(Kahn 1984a, pp. 98–100).
In the article on the multiplier Kahn studies the effects of an increase in
investment on aggregate output in terms of the demand and supply of
consumer goods in aggregate under short-run conditions, which were the
appropriate conditions to evaluate the proposal, put forward by Keynes in
the pamphlet Can Lloyd George Do It? (Keynes [1929] 1972) to imple-
ment a public works policy to get out of the economic depression. If the
level of demand is high, the productive capacity will already be largely
utilized and its greater utilization will call for an increase in costs and
therefore in prices. But if the level of demand is low, plant and equipment
will be largely unused, so production can be increased without any appre-
ciable increase in unit costs and prices.
The crucial aspect is therefore the shape of the costs of enterprises in
the short term. We have seen that study of various types of costs and their
development was the focus of analysis in the Dissertation, where Kahn
assumed that the average cost curves were shaped like an inverted L. It is
natural, therefore, to suppose that Kahn, in writing his article on the mul-
tiplier, drew on his prior knowledge to identify the appropriate shape of
the cost curves needed to construct an aggregate supply curve for con-
sumer goods. However, in the article on the multiplier, although a wide
range within which costs are constant is mentioned, the assumption that
they are in the shape of an inverted L is no longer to be found. This was
probably influenced by Pigou’s criticism of the hypothesis in his Fellowship
Committee Report, which Kahn was able to read shortly afterwards: “I
think unfortunate that he should assign to [L-shaped supply curves], as he
does, a central place in his formal analysis” (RFK papers, 2/8).
The importance of the inverted L-shaped curves lay in the fact that, as
we have seen, they forced Kahn to introduce the hypothesis of imperfect
competition in his Dissertation. If, on the other hand, the hypothesis of
the shape of increasing cost curves is maintained, it is no longer necessary
to abandon the hypothesis of perfect competition.
As we know, in the General Theory Keynes accepted the traditional

assumptions that short run marginal cost curves are increasing22 and that
the degree of competition is given and that firms’ behaviour is driven by
profit maximization. The most important consequence of application of
the Keynesian recipe to unemployment is that any increase in demand—if
costs are rising and firms must maximize profits—requires an increase in
prices. If money wages are given, the increase in prices leads to a decrease
in real wages and thus increase in employment can only be achieved at the
expense of a decrease in real wages. In the Keynesian approach the direc-
tion of causality goes from increasing employment to decreasing wages
and not vice versa. But accepting the existence of an inverse relationship
between wages and employment lent itself to misrepresentation of the
Keynesian message and its incorporation into a completely different theo-
retical scheme.
Kahn accepted the responsibility for having suggested to Keynes the
idea that “short- period supply curves were rising curves” (“Unemployment
as seen by the Keynesians”, Kahn 1976c, also Chap. 11, note 14, in this
volume) with all the consequences that this entailed. The merit of having
induced Keynes to return to the subject of the trend of real wages with
respect to employment (Keynes [1939] 1973c), is attributed to the work
of two Cambridge Research Students, J. Dunlop and L. Tarshis (Dunlop
1938, 1939 and Tarshis 1938, 1939).
However, there is no evidence that Kahn ever regretted that Keynes
had accepted the assumptions of perfect competition and profit maximiza-
tion. He defended the former on the grounds that it was made “for sim-
plicity” and the latter on the basis of the conviction that alternative
assumptions based on the degree of monopoly or a constant mark-up were
tautologies or assumptions rather than true theoretical explanations.
The collaboration between Kahn and Keynes was very close in the years
leading up to the publication of the General Theory. It was Kahn who
played the most important role in guiding Keynes’ thinking in some rele-
vant respects (Marcuzzo 2002), but in general it was from the discussions
within the “Circus” and those of the following months that the General
Theory took shape.
22
For the maintenance of this hypothesis, Keynes is known to have attributed the respon-
sibility to Kahn (Keynes 1973a, pp. 399–400).
1 INTRODUCTION 15
The voluminous correspondence,23 in some cases unpublished, between

Keynes and Kahn between 1931 and 1935 (the General Theory was fin-
ished in December of that year) shows Kahn’s insistence on the need for
definitions to be more precise and demonstrations more stringent. For
example, he intervened on the third draft, in September 1935, on the way
to demonstrating the necessary equality between savings and investment.
In a letter to Keynes in October 1935 (published in Keynes 1973b,
p. 637), Kahn wrote:
I do not like you saying that saving and investment are “different names for
the same thing”. They are different things (that is the whole point)—they
are certainly different acts—but they are equal in magnitude. I still hold that
the simple-minded proof that saving = investment, appropriate for those
who cannot grapple, with user cost, etc. is called for—not only for the sake
of the simple-minded, but to prevent the obvious retort that all your stuff
depends on your peculiar definitions. What is wrong with saying that how-
ever income is defined,
Income = value of output = consumption + investment
also income = consumption + saving
∴ saving = investment
This truth is far too important (and far seldom recognised) to be con-
cealed in a mist of subtle definition.
Again, Keynes accepted Kahn’s suggestion, as can be seen on compar-

ing the final version (Keynes [1936] 1973a, p. 63) with the third draft
(Keynes 1973b, p. 424). There is ample evidence that the atmosphere in
the months when the General Theory was being written was one of expec-
tation of a great theoretical change, of which the then “young Keynesians”
were perhaps more convinced than Keynes himself. Joan Robinson even
went so far as to say later on: “there were moments when we had some
troubles in getting Keynes to see what the point of his revolution really
was” (Robinson, [1973] 1979, p. 170).
On the question of the nature of the “Keynesian revolution”, which
would only come about with the General Theory, Keynes was much more
cautious and, with regard to the relationship with the Treatise on Money,
he used expressions on several occasions aiming to recall aspects of conti-
nuity as he wrote “Thus the new argument, though (as I now think) much
23
On this correspondence see Marcuzzo 2005.
more accurate and instructive, is no more than a development of the old”

(Keynes [1936] 1973a, pp. 77–78).
Kahn’s position is very precise in identifying the points of departure of
the General Theory from the Treatise, which would have consisted above
all in the definitive abandonment of the Quantity Theory of Money and in
the understanding of the causal link between investments and savings but,
unlike Robinson, he seems more inclined to hold that the importance of
the Keynesian approach should not be identified solely with the
General Theory.
As we know, Keynes fell seriously ill in April 1937 and almost immedi-
ately after was absorbed by the problems of the imminence and then the
outbreak of war. This marked the beginning of a new phase in their col-
laboration, not least because of the new responsibilities that Keynes’s
absence from academic life was imposing on Kahn.
In later years, Kahn would return in various contexts to Keynes’s ideas,
as the two writings that complete this section exemplify: “Some Aspects of
the Development of Keynes’s Thought” (Chap. 6, Kahn 1978) and the
Raffaele Mattioli Lecture (Chap. 7, Kahn 1984b), published here under
the title “‘The General Theory of Employment, Interest and Money’”. By
reconstructing what Keynes himself “actually thought and wrote” (Kahn
1978, p. 545), Kahn pursued two related objectives. First, to provide ele-
ments useful to clarify some of the controversies between Keynesians and
non-Keynesians, particularly severe in the 1970s. Second, to reaffirm the
general validity of certain theoretical points which Keynes formulated and
which Kahn endorsed and developed. In this respect, Kahn’s writings on
Keynes are important both as contributions to the history of economic
thought and as further developments of the Keynesian approach as an
alternative to the neoclassical general equilibrium approach.
As is his custom, Kahn pays great attention to detail, offering a meticu-
lous reconstruction of Keynes’ change of mind on the link between money
and the price level, from the acceptance of the Cambridge equation in the
Tract on Monetary Reform (Keynes [1923] 1971a) to the rejection of
Quantity Theory in the General Theory. Crucial in determining this shift is
Keynes’s recognition of the role of asset prices and the interest rate in
mediating the influence of money on prices, through investment and prof-
its. This recognition allows Keynes, and Kahn with him, to free himself
from the “monetary mystique” that posits the existence of a direct causal
link between money and prices without explaining what this link derives
from. To Keynesians, the link between money and prices is neither direct
1 INTRODUCTION 17
nor univocal and other forces must be considered, starting with nominal
wages as determinants of variable unit costs.
Kahn insists on the influence of contingent conditions in shaping
Keynes’ ideas on these issues, and indeed on the absence of a systematic
and satisfactory treatment of the behaviour of money wages in the General
Theory, where Keynes focuses on the reluctance of wages to fall in the
presence of high unemployment while questioning the idea that if wages
fell unemployment would be reabsorbed.
Moreover, the simplification of Keynes’s ideas, as in the neoclassical
synthesis, opens the way to the possibility of imagining a binary world in
which, if there is unemployment, wages do not change and if there is full
employment, any increase in aggregate demand has only inflationary con-
sequences. As we will see in greater detail below, Kahn firmly rejects this
view in favour of a more complex assessment in which, without ignoring
the possible inflationary effects of a sharp increase in aggregate demand,
inflation can be triggered by sectoral bottlenecks and/or distributional
and inter-union conflicts, even in the presence of high unemployment.
Kahn reiterates that full employment and stable prices are compatible with
one another, provided policymakers are prepared to use all the available
instruments including monetary, fiscal and income policy to foster the
appropriate coordination of economic agents’ decisions. This attitude is
typical of the Keynesian approach to policy problems at both the domestic
and international levels, as the writings collected in the third part of this
volume evidence.
International Money and Trade

Britain declared war on Germany on 3 September 1939. Keynes wanted
Kahn to be employed by the Treasury as a Civil Servant for the period of
the war, but he initially met with considerable resistance because Kahn
appeared to be too close to Keynes who was regarded with great suspicion
at the time (Marcuzzo 2020b, p. 10). Kahn was eventually given a job at
the Board of Trade, where he began work in December 1939. The Board
of Trade was in charge of finding ways of reducing the demand for con-
sumer goods, to make room on ships and free up resources for military
purposes. It soon became clear that the only solution was to resort to
direct rationing of food and clothing. Kahn was one of the architects of
the adopted scheme of rationing through a system of points, which was
suggested to him by reading the German press (Marcuzzo 2020b, p. 14).
In October 1941, Kahn moved to Cairo to take up a position first as

Economic Adviser and then as Deputy Director General of the Middle
East Supply Centre. The task of this centre was to gather information and
to handle the issue of the priority of imports into the area, in cooperation
with some twenty governments in the Middle East that had different
administrative structures and independent monetary systems. On his
return to London in January 1943, Kahn worked for a year at the Ministry
of Supply, with the task of studying the post-war conditions of raw materi-
als, in terms of both price and volume. In the latter period Kahn again
worked very closely with Keynes and both worked on a buffer stock
scheme for commodities and on problems in the sterling area.
Kahn’s return to Cambridge academic life in September 1946 and his
growing teaching and administrative commitments did not prevent him
from continuing to collaborate with international institutions and to
reflect on international monetary and economic issues. Kahn’s intellectual
contributions in this field, especially between the 1940s and 1960s, can be
divided into three distinct although closely related areas: exchange rates
and international payments, buffer stocks and commodity price stabiliza-
tion, economic development and international cooperation.
Regarding the first issue, Kahn devoted particular attention to the
problem of the post-war dollar shortages and how different countries
could cope with it, as well as the organization of intra-European pay-
ments. As Kahn argues, no single one-size-fits-all solution to the problems
posed by the shortage of dollars exists and different countries, giving pri-
ority to full employment and the improvement of their citizens’ living
standards, should be left free to adopt the policy mix that best suits their
institutional, social and political conditions.
The same spirit pervades Kahn’s analysis of buffer stocks and commod-
ity price stabilization, one of the cornerstones of the plans set out by
Keynes as early as 1938. Kahn began working on buffer stocks in 1952 as
he started cooperating with the Food and Agriculture Organization
(FAO). In recent years, this part of Kahn’s activity has come under inten-
sive and fruitful research (Fantacci et al. 2012; Paesani and Rosselli
2014; Rosselli 2017). The research has brought to light both the gesta-
tion of a book for the FAO—which was never published, and which dealt
with fluctuations in the prices of primary products and how best to curb
them through the creation of buffer stocks managed by a supranational
authority—and Kahn’s views on buffer stocks and the context in which
those views took shape.
1 INTRODUCTION 19
Analysis of Kahn’s views on these issues is enhanced with consideration

of his contributions as a member of four groups of experts for the United
Nation Conference on Trade and Development (UNCTAD) in the course
of the years 1965–1969 (Marcuzzo 2020b, pp. 35–36). These reports
remain largely unexplored in the literature on Kahn. In the 1965 report,
the Group considered the need for reform of the International Monetary
System, which would make it responsive to the need for economic growth
of both the developed and developing countries, advocating that part of
the additional international liquidity created by the International Monetary
Fund (IMF), in the form of Special Drawing Rights (SDR), should be
placed at the disposal of the International Bank for Reconstruction and
Development (on this see also the fourth UNCTAD report). The second
and third report dealt respectively with the possibilities of coordinated
expansion of trade among the developing countries and with clearing and
credit arrangements. In the fourth report (UNCTAD 1969), the group
worked on the ideas put forward in the first report and advanced proposals
for the shares of SDRs to be assigned to developing countries.
The essays in this section—“The International Regulation of Trade and
Exchange” (Chap. 8, Kahn 1952b), “The International Monetary System”
(Chap. 9, Kahn 1973) and “The Historical Origins of the International
Monetary Fund” (Chap. 10, Kahn 1976b)—reconstruct the design and
execution of the new international monetary system that has emerged
since the war.
According to Kahn, the primary objective of regulating international
trade and exchange rates is to boost employment and improve living stan-
dards in all countries, advanced and emerging alike. Free trade and
exchange rate liberalization deserve to be pursued only if they are of use in
achieving this objective. The possibility that opening up too quickly could
make an emerging country poorer, forcing it to export a lot and at decreas-
ing prices in order to pay for essential imports, is real and needs to be
taken into account. It follows from all this that the economically and
financially weaker countries are entitled to more favourable treatment, in
terms of protection from international competition, than the richer and
stronger nations.
As far as the system of fixed but adjustable parities is concerned, Kahn
warns of the difficulties of managing such a system in the presence of pri-
vate financial operators driven by short-term speculative objectives and
capable of mobilizing huge amounts of capital on the spot and futures
markets in pursuit of those objectives. In this context, managing exchange
rates rationally—as in the original intentions of Bretton Woods, which

Kahn endorses—obliges the monetary authorities and the IMF to equip
themselves to counter the destabilizing effects of international financial
speculation. The key is to prevent speculation in one direction and the
consequent build-up of strong upward or downward pressure on individ-
ual currencies. To do so, the monetary authorities must beat the specula-
tors at their own game, catching them by surprise with unexpected changes
in official parities of as small a magnitude as possible at frequent but not
excessive intervals and without following predetermined time patterns. In
this way, they can hope to prevent herd behaviour, making it easier to
preserve the official parity system.
In turn, against the idea of a certain superiority of floating versus fixed
exchange rates, and the underlying belief in the superior rationality of
markets, Kahn reaffirms the merits of adjustable fixed parity policy, pro-
vided that it acts in a discretionary, rapid manner and is driven by the pri-
mary interest of preserving employment, encouraging productive
investment and improving living standards. The same objectives must
guide reform of the SDR allocation system, which Kahn discusses in the
second part of Chap. 9, focusing on the needs of the emerging countries
and the less competitive industrial countries.
The problem of hammering out rules to balance a general need for
orderly economic life, prosperity and fairness with the possibility of main-
taining temporary forms of discrimination for the benefit of weaker coun-
tries and a way out of unexpected situations returns to the centre of Kahn’s
detailed account of the “Historical Origins of the International Monetary
Fund”. Kahn’s reconstruction is interesting not only as an opportunity to
reaffirm the validity of the general principles discussed above, but also for
the evidence it offers on Keynes’ evolving views on the rules that were
being defined at Bretton Woods, as well as the background to the Anglo-
American negotiations before and after Bretton Woods and some of the
main differences between Keynes’s plan for a Clearing Union and the US
plan set out by D. White.
Taken together, the three essays collected in this section are an example
of how Kahn assesses the capacity of these institutions to perform their
task of generating opinions or virtuous behaviour in markets, such as
money and foreign exchange (but, as we shall see, also in the labour mar-
ket), in which we are not faced with optimizing individual behavioural
functions. The role of the institutions in these markets should be to create
the conditions in which “virtuous” decisions are activated from the
1 INTRODUCTION 21
collective point of view, given that the individual pursuit of a hypothetical

maximum profit or utility is not always capable of generating either a social
optimum or, in the long run, an optimum for the individual.
Unemployment, Wages and Inflation

Kahn’s interest in international economic problems was not limited to
international trade and exchange rate issues but encompassed other areas,
including the problem of inflation, which resurfaced in the developed
world in the mid-1950s. His participation, in 1959, in the Group of
Experts of the Organization for European Economic Cooperation
(OEEC) to study the problem of rising prices marks the high tide of his
influence on the theory of inflation.
Besides Kahn, the Group of Experts included W. Fellner (Yale),
M. Gilbert (OEEC), B. Hansen (Konjunktur Institutet, Stockholm),
F. Lutz (Zurich University) and P. de Wolff (Central Planning Bureau,
The Hague). The Report by the Group (Fellner et al. 1961) documents
the behaviour of prices between 1953 and 1960 in a selected group of
developed countries and analyses the role of demand, wages, monopolistic
pricing and external considerations that influence them. In his own recol-
lection of the episode (Marcuzzo 2020b, pp. 30–32), Kahn—who claims
to have acted as Chairman de facto of the Group—clarifies how the Group
introduced the novel concept of wage-wage spiral in opposition to the
price-wage spiral notion. As Pasinetti (1991, p. 430) recalls, “It was this
Group of Experts that—in the early 1960s, when very few had yet realized
the dangers of inflation—introduced the concept of ‘wage-wage spiral-
leap frogging’ connected with the consequences of excessive wage
increase”.
Kahn’s analysis of inflation is based on an articulated theoretical frame-
work, which draws on his reformulation of the liquidity preference theory
formulated in Kahn (1954). Here Kahn abandons the idea that there is
univocal relationship between the demand for money and interest rate, as
represented by a downward sloping function, in favour of a more complex
view where money is not taken as exogenous (Cristiano and Paesani
2018a). What is important in determining interest rates is the interaction
between different categories of investors, each of them with their expecta-
tions and different perception and tolerance of risk and uncertainty. This
leads to abandonment of the idea of governing the money supply to
achieve price stability and Kahn’s recommendation to directly control the

entire interest rate term structure.
This recommendation appears in the Memorandum delivered by Kahn
to the Radcliffe Committee (Kahn [1958] 1972, pp. 124–152), enriched
with his Evidence, which was later published (Radcliffe Committee on the
Working of the Monetary System 1960). By controlling the structure of
interest rates directly, the monetary authorities can influence domestic
investment, exchange rates and international capital movements simulta-
neously, and so determine both the internal and external equilibrium at
the same time. Combining this with control of private consumption
through taxation gives full control over aggregate demand and hence over
the level and change of output, employment, wages and prices.
During the 1970s, confronted with stagflation, financial instability and
social upheaval, during Britain’s decade of discontent, Kahn remained
faithful to his belief in the close nexus between wage and price inflation
and the possibility to reduce both while preserving high employment and
external balance through the combination of incomes policy with appro-
priate fiscal and monetary measures. At the same time, the events of the
1970s forced Kahn to reconsider Keynes’s contribution and the character-
istics of a Keynesian approach, in order to attempt an all-out defence of
them, both against Monetarism and against what we might call the excesses
of Keynesianism.
Kahn shared Keynes’s belief in the largely political nature of the bar-
gaining processes underlying the determination of wages, and in the dif-
ficulty of formulating general theoretical propositions regarding this
process. Similarly, Kahn opposed the idea that keeping inflation under
control calls for austerity measures designed to increase unemployment
and so keep wages and prices under control. This idea had been gaining
ground in Britain since the early 1950s, in a context of very low unem-
ployment and rising inflation (see Cristiano and Paesani 2018b, c).
Kahn was dissatisfied with the way Keynes defined involuntary unem-
ployment, even going so far as to say that the second chapter of the
General Theory always “left him very cold” (Kahn 1976c, p. 23), as he
writes in “Unemployment as Seen by the Keynesians”, which the present
collection contains (Chap. 11). Kahn took issue against both the monetar-
ists and the other anti-Keynesians regarding the explanation of the high
inflation rates of the 1970s, based on the expansive fiscal/monetary poli-
cies that caused the money supply to grow excessively. For the Keynesians,
any possible link between inflation and increasing aggregate demand
1 INTRODUCTION 23
depends on the level of nominal wages and the response of the trade
unions to the economic situation and government measures. For the
monetarists, on the other hand, the trade unions have little or nothing to
do with inflation, reduction of which requires a squeeze on the growth
rate of the money supply, driving unemployment above its natural level, a
concept whose soundness Kahn doubted.
It was Kahn’s and the Keynesian position not to dispute that persistent
inflation is concomitant with parallel increase in the money supply, believ-
ing that an increase in the money supply is a necessary condition and not
the cause of inflation, the main explanation for which remains the wage-
wage spiral. Several factors can exacerbate this spiral. They include a low
rate of growth in productivity and living standards, ineffective centralized
wage negotiations, and short-sightedness on the part of the trade unions
in failing to see the long-term benefits of wage moderation, as Kahn dis-
cusses in “Thoughts on the Behaviour of Wages and Monetarism” (1976d,
Chap. 12 in this volume). From this perspective, the key to containing
inflation and maintaining high employment is to reform wage bargaining
and a strong commitment by the State to public investment and pro-
grammes to encourage worker mobility and training and improve relations
between the social partners within companies.
The reversal in the hegemony of Keynesian thought coincides with the
time when the western economies were being hit by levels of inflation
unprecedented in the post-war period, and the Cambridge School of eco-
nomics was gradually falling out of grace. Kahn’s retirement in 1972, one
year after Joan Robinson, his replacement by Frank Hahn on the Chair of
Economics and the failure to appoint lecturers in the Keynesian tradition
to Professorial positions represented as many steps in this direction (Saith
2019). In parallel, the Keynesian front, never really united in the first
place, became increasingly fractious, as epitomized by the controversy
over the relationship between government budget deficits and external
balance between Kahn and M. Posner, on the one hand, and the New
Cambridge School represented by N. Kaldor and W. Godley, among oth-
ers, on the other (Kahn and Posner 1974, Shipman 2019).
Kahn’s levelled his at times bitter and biting polemic at both politicians
and trade unionists, guilty of “irresponsible” behaviour in not curbing the
rise in monetary wages, and at the new hegemonic theory—Monetarism—
which to all intents and purposes meant restoration of a pre-Keynesian
approach. Keynes, too, was accused of not having sufficiently foreseen
that, in economies that had experienced high levels of employment for
over twenty-five years, money wages would grow in an uncontrollable way

and that it would therefore be necessary to design an institutional frame-
work to regulate their upward pressure.
It may be useful to recall here some characteristics of the system that
Kahn was facing. In the mid-1960s, the institutional mechanism for deter-
mining wages and salaries consisted of three instruments. The first, and
most important, was collective bargaining between workers’ and employ-
ers’ representatives, which covered almost all industry and professional
organizations. In 1959 there were as many as 651 Trade Unions in Britain,
although in the following years the number gradually decreased (in 1976,
for example, there were 493 (see Smith 1980, p. 96).
The Congress of Trade Unions (TUC) was the political representative
body. The second instrument, established by the Wages Council Acts of
1945, was legislative regulation, which mainly concerned agriculture, the
catering industry and a number of particular sectors. The Wages Board or
Wages Council was composed of equal numbers of employer and employee
representatives and a large number of “impartial”, ostensibly independent
members (Wootton 1964, p. 82). The third instrument was the arbitra-
tion tribunals set up by the Minister of Labour. This instrument provided
“arbitration of last resort” when agreement in collective bargaining failed.
By the end of the 1970s collective bargaining covered about 80% of the
manual workers and about 50% of the non-manual workers. Wages coun-
cils and similar forms of “quasi” collective bargaining covered a substantial
part of the remaining non-manual workers. In the non-manual sector, the
wages of the non-unionized segment were in fact determined collectively
(Nickell and Andres 1983, p. 183). However, the role of national bargain-
ing in determining the wages actually paid by the enterprise, or at the level
of the individual department, had been gradually declining throughout
the post-war period. Indeed, “wage slippage”—the gap between wages
actually paid and nationally negotiated wages—eventually undermined the
income policy of Harold Wilson’s governments between 1964 and 1970.
When the general election of June 1970 brought the Conservatives
back into power, they declared their firm intention not to use an incomes
policy; this determination was reiterated by the next Labour government,
which, once elected in 1974, declared itself in favour of an incomes policy
only as a voluntary response of the social partners (Dawkins 1980, p. 60).
This led to the “social contract” of the mid-1970s—to which Kahn
refers—which was essentially an agreement between the leaders of the
Trade Unions and the Labour government, in which help to moderate the
1 INTRODUCTION 25
wage squeeze was negotiated in return for social policies acceptable to the
Trade Unions.
Those were the years when not only income policy but also full employ-
ment policy were disappearing as government objectives. When Margaret
Thatcher became Prime Minister in 1979, for the first time since the war
the government did not declare full employment as an objective because,
according to its monetarist philosophy, it was not an objective that the
government could pursue directly through demand-support policies.
Rather, the objectives were to reduce public expenditure, taxation, public
sector needs and to re-establish market mechanisms. The latter would be
directed at indirectly fostering employment. By reducing the growth rate
of the money supply, the objective of reducing inflation would also be
achieved. To the refutation of the “mystique” of Monetarism and the con-
struction of an alternative institutional framework on Keynesian founda-
tions, Kahn would devote his efforts as a theoretical economist, academic
and member of the House of Lords for the rest of his life.
Conclusions
Kahn’s logical abilities were particularly acute in the sense that the math-
ematician, Felix Klein, distinguished “logicians” from “formalists” and
“intuitionists” to explain that “the main strength of the people who
belong to this class lies in their logical and critical abilities; in their ability
to give precise definitions and to derive from these strict deductions”.24
Unlike Keynes, who knew how to employ rhetoric as a persuasive tech-
nique, in Kahn deductive reasoning was always the chosen technique not
only for construction of the argument, but also for its defence. It was this
obsession with precision in the smallest details that probably prevented
Kahn from writing more extensively.
Joan Robinson, who possibly knew Kahn better than anyone else,
explained Kahn’s “perfectionism” in the preface written in 1976 for the
Italian edition of Kahn’s collected essays (Kahn 1972, 1976a): “He had
great repugnance to the thought that there might be an error attached to
his name” (JVR i/8/7). This is also the main reason why Kahn was
24
“‘Formalists’ are mathematicians who are exceptionally capable of formally working out
a given problem and finding the algorithm. Finally, ‘intuitionists’ are those who give special
importance to geometrical intuition … in all branches of mathematics” (Weintraub 1998,
pp. 1841–42).
extraordinarily generous in helping others and equally extraordinarily

reluctant to publish. Keynes had intervened in September 1934, in urging
Kahn to publish part of the results of the Dissertation, with words that
sound prophetic today:
you must not get into the habit of never doing your own work but always
someone else’s for them. In the first place you will get subconsciously (or
consciously) badly irked by it yourself and in the second place you will end
up by getting the credit for everything of any merit published by anyone
during your life-time!25
Two obstacles must be overcome, if one wishes to explore Kahn’s indi-

vidual contribution and originality. The first obstacle lies in his self-effacing
nature, his choice frequently to carve out the role of supporting character
rather than protagonist, his reluctance to publish works without a very
great deal of thought. All the recollections of him concur on these aspects,
and on the need to take them into account when fully assessing Richard
Kahn’s scientific and intellectual contribution. The second obstacle resides
in the way of “doing theory” typical of the Cambridge Group of econo-
mists—a creative process based on dialogue and continuous exchange of
views between professors and young researchers, in written and oral form,
before publication. The role of the “Cambridge Circus” in Keynes’ transi-
tion from the Treatise on Money to the General Theory is the outstanding
example of a creative process that can make it difficult to fully identify the
contribution of individuals. Kahn certainly contributed to the work of
others while there is less evidence about others playing a direct influence
on the development of Kahn’s own work, with the exception of Keynes.
To summarize the main messages that emerge from reading the twelve
essays in this volume, Keynes’ strong influence on Kahn is evident, as is
Kahn’s ability to take up Keynes’ legacy and develop it in the face of the
contingent problems of the British and international economies.
As far as Kahn’s legacy is concerned, we can say that for him the pri-
mary objectives of economic policy are to combat unemployment and
improve living standards. Both objectives are to be achieved by promoting
productive investment and removing obstacles and bottlenecks that can
hold back development and trigger inflationary spirals at the sectoral level.
25
JMK to RFK, 13.8.1934, in RFK papers, 13/57/58.
1 INTRODUCTION 27
Price stability and balanced external accounts must be pursued using all
possible tools, but without resorting to austerity policies that depress
wages and consumption by raising the unemployment rate. Wage develop-
ments in relation to productivity are central in determining the link
between unemployment and inflation and must be governed by appropri-
ate institutions that foster dialogue and cooperation between the social
partners, while respecting the freedom of choice and autonomy of indi-
viduals and organizations.
Markets must operate freely, without forgetting that competition is not
perfect and that the financial markets are particularly exposed to destabi-
lizing speculation and herd behaviour. This calls for constant vigilance on
the part of the relevant authorities and a willingness to act promptly and
experiment with innovative regulatory measures, following the logic of
trial and error.
In defining growth and development strategies, it is essential to con-
sider the heterogeneity of the actors in the field, the power relations
between them, the conjectures that guide their actions, and the possibility
of governing those conjectures. This last aspect, perhaps the most impor-
tant, requires an adequate institutional context, discretion and speed of
execution in economic policy choices, as well as a constant effort of per-
suasion on the part of policymakers and economists in influencing public
opinion in the right direction. International cooperation is essential to
deal with global problems efficiently. This cooperation must allow for
more favourable treatment of the most disadvantaged nations and calls for
foresight on the part of the stronger nations and the ability to understand
that their own interest in the medium to long term is served by strongly
supporting the less favoured nations. The more successful international
cooperation is, the less need there will be for individual countries to resort
to drastic unilateral measures that are harmful to other countries and
counterproductive for those who introduced those measures in the
first place.
With this second volume of collected essays, we hope to have contrib-
uted to bringing to the attention of contemporary readers these ideas and
the man who defended them throughout his life, in academia and in the
institutions, Richard Ferdinand Kahn.
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PART I
Imperfect Competition
CHAPTER 2
Imperfect Competition and the Marginal

Principle
Richard F. Kahn
I
So long as the economist had to think of the conditions of demand in
terms of price and elasticity, it was difficult to advance the theory of value
very far beyond the realm of perfect competition. The maximisation of
monopoly net revenue provides but a clumsy tool. Marshall himself must
have been well aware of the inadequacy of the construction with which it
is usual to associate his name. For in advocating the use of a series of rect-
angular hyperbolas “made on thin paper”, he had to admit that “a careful
study of the shapes thus obtained [by drawing diagrams to represent vari-
ous conditions of demand and of monopoly supply] will give more assis-
tance than any elaborate course of reasoning in the endeavour to realise
the multiform action of economic forces in relation to monopolies”.1 It is
only recently that the study of monopoly has ceased to be an experimental
Kahn, R. F. (1933). Hitherto unpublished
1
Principles, p. 483 note.
R. F. Kahn
© The Author(s), under exclusive license to Springer Nature 35

Switzerland AG 2022
M. C. Marcuzzo, P. Paesani (eds.), Richard F. Kahn,
Palgrave Studies in the History of Economic Thought,
https://doi.org/10.1007/978-3-030-98588-2_2
36 R. F. KAHN
branch of economics, dependent on an adequate supply of squared paper,

and has become subject to the same simple processes of pictorial reasoning
that have long been applied to perfect competition. The change is due to
the addition to the economist’s apparatus of thought of the marginal rev-
enue curve—a simple device and long overdue—by the hands of a number
of independent workers.2
Just as marginal cost is the addition to cost of production that results
from increasing output by one unit, so marginal revenue is the addition to
sale proceeds, or gross revenue, that results from increasing the rate of
selling by one unit. And the marginal revenue curve bears the same kind
of relationship to the demand curve, which may be regarded as the curve
of average revenue, that the marginal cost curve bears to the average cost
curve. Now the profit of any individual producer is at a maximum when
his marginal revenue is equal to his marginal cost. Thus, instead of having
laboriously to discover for what output a certain area is a maximum, we at
once get monopoly output as determined by the point of intersection of
the marginal revenue curve with the marginal cost curve. If a smaller out-
put than this were produced, more could be added to proceeds than to
costs by increasing output; while, if output were greater than that given by
the intersection of the marginal revenue and marginal cost curves, a reduc-
tion of output would diminish costs more than proceeds. The proposition
that the marginal cost of each individual producer is equal to his marginal
revenue is fundamental to economic theory.
2
So far as I can discover, priority is to be attributed to Professor Yntema of the University
of Chicago (see Journal of Political Economy, December 1928, p. 687). In Harvard the
marginal revenue curve was discovered by Professor Chamberlin (The Theory of Monopolistic
Competition, p. 14), by Mr. A. Smithies, of Magdalene College, Oxford, (in an unpublished
essay) and, for use at the Harvard Business School, by Professor Philip Cabot and Professor
R.S. Meeriam. In Cambridge, England, the idea was introduced independently, in unpub-
lished essays, by Mr. C.H.P. Gifford, of Magdalene College, who was at that time an under-
graduate, and by Mr. P.A. Sloan, of Clare College. The term marginal revenue was devised
for their conceptions by Mr. Robinson, and it was only on the publication of Professor
Viner’s article (Zeitschrift für Nationalökonomie, September 1937) that it was realised that,
by a coincidence, precisely the same term was in use at Chicago. At Oxford it was Mr. Harrod
who invented the curve, again under a different name (Economic Journal, June 1930,
p. 238), while mention should also be made of professor Mehta of the University of Allahabad
(The Elements of Economics Mathematically Interpreted, p. 252) and of Dr. Schneider of
the University of Bonn (Reine Theorie monopolistischer Wirtschaftsformen, p. 14), and
probably of several others. The marginal revenue curve forms the basis of Mrs. Robinson’s
forthcoming book on The Economics of Imperfect Competition, and the substance of this
paper is largely derived from her hitherto unpublished work. Professor Chamberlin’s treat-
ment of the same subject was not yet available at the time that the paper was prepared.
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Je la suivis dans la galerie et je descendis lentement l’escalier.
O Seigneur, si tu existes quelque part, garde l’homme de cette
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source de souffrance, de la courbe délicate du cou, chemin du
malheur, de la ligne fuyante des lèvres, cause de calamités.
LE TIGRE HUMAIN
Tout ce qui arriva ensuite fut vertigineux. Je crois me souvenir

que je me suis assis dans un fauteuil à bascule et que j’ai allumé un
cigare. Puis je l’ai éteint et aussitôt Eva a paru devant moi.
Elle avait un air autoritaire et décidé. Elle ne portait plus le
costume de la princesse, mais une sorte de veston d’homme avec
une jupe très courte qu’elle mettait pour monter à cheval. Je
remarquai que sa poudre bleuâtre, hâtivement enlevée, laissait à sa
peau une tonalité colorée en azur qui me fit penser à ces vestiges de
rêves dont on garde confusément la mémoire après le réveil. Une de
ses dents, sur le côté, avait aussi conservé un fragment de lamelle
d’or.
Elle voulait faire une grande course à cheval, me monter la
lamaserie de Kobou-Dalem, disait-elle.
Nous partîmes. Il n’avait pas été question de Djath. Ali nous
accompagnait seul.
— La chance me favorise, dit une voix intérieure en moi où
naissait et grondait déjà le désir de la bête.
Nous longeâmes d’abord une route mal tracée le long de la
lisière de la forêt. C’est là que nous vîmes, assis sur une pierre, au
pied d’un manguier, un être hideux, une sorte de squelette vivant
parfaitement dessiné sous une peau parcheminée, avec une
chevelure si longue, et si épaisse, que je me demandai aussitôt où
elle pouvait puiser sa substance. Comme le singe que j’avais tué la
veille, il tenait une mangue à la main.
J’allai, par manière de plaisanterie, lui faire signe qu’il était
nécessaire qu’il en mangeât beaucoup pour grossir un peu, quand il
se leva à ma vue et prononça, en me montrant du doigt, des
malédictions que je ne compris pas.
— C’est l’ascète Chumbul, dit Eva. Il a dû entendre, hier, vos
coups de fusil et il vous garde rancune d’avoir tué ses amis les
animaux.
Je haussai les épaules et nous passâmes.
La route devint presque impraticable tellement elle montait et elle
descendait parmi les lianes et les végétations de toutes sortes.
Nous nous trouvâmes brusquement en face de deux statues
colossales représentant des personnages, prêtres ou dieux, je ne
sais, agenouillés sous des fleuves de verdure avec des serpents
entrelacés autour des bras.
— Ce sont les Rechas du temple qui est à droite, dit Eva.
Un peu plus loin, il y avait un éléphant de pierre entièrement
caparaçonné et dont la trompe gisait sur le sol d’une manière tout à
fait ridicule.
Je songeai à l’absurdité de cet antique peuple soi-disant civilisé,
qui n’avait rien trouvé de mieux, comme signe de sa civilisation, que
de reproduire en pierre des images d’animaux sur le coin du monde
qui était le plus infesté de bêtes vivantes.
Voilà la lamaserie, dit avec admiration Eva, en désignant
quelques misérables bâtisses de pierre qu’on distinguait dans les
arbres à un endroit où aboutissaient des avenues tellement
encombrées de végétation qu’il aurait été impossible de les franchir
à cheval.
Je faillis pousser un cri de surprise. Nous croisions un petit
groupe de personnages silencieux. Ils étaient vêtus avec des robes
de coton rouge sale et portaient sur la tête un bonnet de même
couleur. Ils entouraient un homme habillé à l’européenne, mais très
simplement, dont je crus reconnaître le visage. Je remarquai que cet
homme avait un chapeau de paille de couleur claire, maculé de boue
qui rappelait, par sa forme, celui que j’avais perdu.
Eva s’était inclinée respectueusement ; je vis qu’elle se retournait
de mon côté et qu’elle pressait son cheval. Naturellement, je pressai
le mien et ce ne fut qu’après que je me rappelai l’homme que nous
venions de rencontrer parmi les lamas. C’était le personnage qui
m’avait été si antipathique dans la fumerie de Singapour.
— Je regrette, dis-je à Eva, de n’avoir pu dire à cet Hindou, ou à
ce Mongol vêtu en Européen, combien son visage m’est
désagréable et combien je suis écœuré par sa manière de caresser
les lézards.
Eva leva les yeux au ciel.
— C’est aussi un lama, mais un lama voyageur, répondit-elle
avec une nuance de vénération dans la voix. Il y en a parmi eux qui
se sacrifient, s’arrachent au bonheur de la méditation dans leurs
solitudes pour aider les autres hommes, ceux qui en ont besoin, les
barbares comme vous et moi.
Je n’attachais pas d’importance à ces paroles, car le ténébreux
désir m’habitait, il me versait des trésors de ruse, il mettait sur mes
traits une hypocrite sérénité.
— Ne faut-il pas faire reposer un peu les chevaux ? dis-je avec
douceur, au lieu de m’exclamer sur la stupidité des lamas qui se
condamnent inutilement à habiter des lieux désertiques pour y
adorer des dieux imaginaires.
— Nous ne revenons pas par le même chemin, répondit Eva.
Nous allons contourner cette masse de forêts que nous avons sur la
droite et nous nous arrêterons un peu dans un bois d’ébéniers que je
connais. Nous ne serons plus alors très éloignés de la maison.
Eva avait l’air de connaître parfaitement le pays et cela m’ôtait le
souci de ne pas m’égarer dans ces forêts uniformes.
Nous atteignîmes bientôt un lieu que l’on pouvait difficilement
appeler un bois d’ébéniers, vu qu’il y avait, outre des ébéniers, des
bambous, des aréquiers, des palmiers nibong et toutes sortes
d’arbres velus, hérissés, formidables dont je ne connaissais pas le
nom.
Mais Eva s’orientait très bien, c’était l’essentiel.
Nous descendîmes de cheval. Plusieurs vagues pistes
aboutissaient à l’endroit où nous nous étions arrêtés.
Alors, mon cœur se mit à battre et je dis, sans regarder Eva, de
la manière la plus indifférente possible :
— Ali pourrait garder les chevaux pendant que, pour nous
délasser, nous marcherions sur un de ces sentiers. Voulez-vous ?
Je levai imprudemment la tête. Nos yeux se croisèrent pendant
qu’elle disait, oui. Sans doute le reflet de la bête était sur mon
visage, car elle hésita soudain et faillit changer d’avis. Puis elle eut
un petit geste insouciant et supérieur qui me fit penser à mon geste
à moi, lorsque je fais claquer mon fouet, au milieu de mes animaux.
Nous marchâmes assez longtemps. Je cherchais un endroit
assez dépourvu de hautes herbes pour pouvoir l’inviter à s’asseoir
sans qu’elle eût la crainte des serpents.
Rien de conscient ne subsistait en moi que la volonté de réaliser
mon désir. Par un dédoublement inexplicable, j’avais honte de moi-
même. Mais quand cette honte se faisait jour, je voyais le visage de
Djath, sa bouche sensuelle et ses mains soignées aux ongles teints.
Et puis une phrase entendue jadis, me revenait à la mémoire.
— Un homme ne doit jamais permettre à une femme de jouer
avec son désir.
Et alors une bouffée d’amour-propre me montait aux joues et je
me sentais rougir en marchant.
— A quelle époque, exactement, a vécu la princesse Sekartaji ?
demandai-je.
Cette date me laissait prodigieusement indifférent et je ne posais
cette question que pour rompre le silence.
Eva dut comprendre la vanité de cette précision car elle me
répondit :
— Quel métier émouvant que le vôtre ! J’aurais tant aimé
dompter des animaux !
Elle ne savait pas qu’elle était en train de s’exercer à ce métier et
que c’était un tigre humain qui marchait paisiblement à côté d’elle.
Le sentier s’était soudain élargi et nous étions arrivés dans une
clairière. Une grande immobilité suffocante pesait sur la forêt et je
percevais à mes pieds le grouillement des germinations, lent,
fécond, sexuel comme le mystère de la vie.
Nous nous étions arrêtés. Je réfléchis à la manière la plus
favorable de saisir Eva par derrière de façon à poser mes lèvres sur
les siennes avant qu’elle se fût rendue compte de mon étreinte.
J’envisageais comme vraisemblable l’hypothèse qu’elle serait jetée
par ce baiser dans une ivresse absolue et que toute lutte serait
inutile. Je laissai glisser à terre mon fusil que je portais en
bandoulière et qui me gênait, en disant :
— Voulez-vous que nous nous asseyions ici ?
Mais ma voix, que l’émotion rendait pareille à un grondement, me
trahit.
Eva se retourna, me vit avec mon masque bestial où affluait le
sang, eut un petit rire énervé et, soit par plaisanterie, soit par
véritable crainte, se mit à courir sur un sentier qui était, non en face
d’elle ni sur sa droite, comme elle devait le prétendre ensuite, mais
sur sa gauche.
Surpris, j’hésitai quelques secondes. Puis, je voulus la rattraper
et je m’élançai sur ses traces.
— Cette fuite, pensai-je, est peut-être une coquetterie de plus.
Mais elle ne se doute pas de la manière dont elle va être saisie
quand je l’atteindrai.
La coquetterie d’Eva l’emportait très loin. Je ne savais pas
qu’une femme pût courir aussi vite. Elle galopait, enivrée sans doute
par sa propre vitesse et l’air chargé de miasmes végétaux et
pendant qu’elle courait j’entrevoyais la perfection de ses jambes
minces et mon désir augmentait. Je m’identifiais à nouveau avec le
tigre poursuivant sa proie, je soufflais comme lui et cette
identification était si complète que parfois je me surprenais à faire
des bonds à son exemple, ce qui retardait ma course.
Eva allait au hasard. Elle prenait un sentier, puis un autre et je ne
sais combien de temps cela aurait duré et si je serais parvenu à la
rattraper quand je butai contre une racine d’arbre et tombai. La
sourde exclamation que je poussai alors la fit s’arrêter et revenir sur
ses pas.
— Vous êtes-vous fait mal, me dit-elle avec une voix curieuse,
qui ne révélait aucune commisération.
Non, je ne m’étais fait aucun mal. J’étais vexé. Eva n’avait plus
peur. Un tigre ne doit pas tomber.
— Il me semble que nous sommes allés bien loin. Je voudrais
bien retrouver mon fusil.
Et alors, nous nous regardâmes, saisis de la même
appréhension. Est-ce que parmi ces clairières et ces sentiers
semblables les uns aux autres, nous allions pouvoir retrouver notre
chemin ?
J’en émis le doute à haute voix tandis qu’Eva gardait sa crainte
pour elle. Elle haussa même les épaules.
Je pouvais être tranquille. Elle avait un sens admirable des
directions.
Je me rappelai alors que ma boussole était restée dans un petit
sac de cuir attaché à l’arçon de ma selle.
Après une demi-heure de marche nous n’avions pas retrouvé la
clairière où j’avais si follement déposé mon fusil et j’exprimai à Eva
mon assurance que nous devions lui tourner le dos.
Une longue discussion s’engagea pour savoir si le sentier qu’elle
avait pris quand elle avait commencé à courir était sur la droite, ou
sur la gauche, par rapport au sentier par lequel nous étions venus en
quittant Ali et les chevaux.
Eva prétendait qu’elle avait tourné à droite. Je disais que c’était à
gauche. Nous nous persuadâmes en partie réciproquement et nous
finîmes par nous rallier tous deux à l’hypothèse que le sentier suivi
au moment de l’abandon du fusil était juste en face de nous.
Quand nous eûmes marché assez longtemps dans la direction
choisie par Eva et qui n’était pas celle que nous venions de juger
bonne, il nous apparut que nous étions dans l’erreur. Eva me
reprocha de l’avoir poussée par ma folle insistance à prendre un
sentier qui ne menait nulle part et elle voulut se diriger par un
nouveau sentier de son choix. Ce sentier aboutissait à des amas
d’énormes rochers que nous n’avions pas rencontrés jusqu’alors.
Et soudain une coloration saphir glissa furtivement, tristement
parmi les bois et annonça la venue de la brusque nuit.
Nous étions irrévocablement perdus et l’absence d’arme à feu
nous empêchait de signaler à Ali de quel côté nous nous trouvions.
Je crois, d’ailleurs, que nous avions franchi une assez grande
distance pour que nous ne puissions entendre les coups de feu qu’il
pouvait tirer. Nous prêtâmes l’oreille en vain. Seules les voix
odieuses de mille animaux, sifflements de haine, jacassements
ironiques, glapissements satisfaits, retentirent sous les feuillages.
Alors Eva affecta une gaîté qu’elle n’éprouvait pas au fond d’elle-
même. Tout cela n’était pas bien grave. Nous dînerions avec
quelques mangues et nous nous contenterions de leur jus pour nous
désaltérer.
Ali ne rentrerait sans doute pas sans nous. Son père
n’éprouverait pas une grande inquiétude puisqu’il saurait sa fille
avec moi et Ali pour la garder. Il penserait que nous avions couché à
la lamaserie. Au matin, je grimperais sur un arbre pour voir la
direction du soleil et grâce à son sens inné de l’orientation, nous ne
manquerions pas de nous retrouver.
En mettant tout au pire, en supposant que nous ne puissions
rejoindre Ali dans la matinée, celui-ci reviendrait chez M. Varoga et
une battue serait organisée, avec des coups de fusil et des bruits de
gong, comme cela avait été fait déjà dans des cas semblables.
L’unique danger consistait à passer une nuit dans la forêt, à la merci
des bêtes sauvages. Mais j’avais des allumettes. Il suffisait de
profiter des dernières lueurs du crépuscule pour trouver un espace
découvert. Là, nous ferions un grand feu et nous pourrions nous
reposer sans crainte et même causer agréablement avant de dormir.
Tout ce que disait Eva était juste, en somme, mais elle ne tenait
pas compte du fauve qui ne craint pas les flammes, de la bête
intérieure de l’âme.
LE TEMPLE DE GANÉSA
— Je me reconnais parfaitement, dit Eva, en voyant des débris

de colonnes, des pans de murailles écroulés émergeant sous les
verdures. Nous sommes revenus sans nous en douter au temple de
Kobou-Dalem. Les Rechas doivent être là.
Les Rechas ! Il n’y avait pas de Rechas. Eva fut obligée de
convenir que nous ne nous trouvions pas en présence du temple de
Kobou-Dalem, mais d’un temple entièrement inconnu et de
proportions immenses.
Je pensai que nous pourrions y découvrir une salle, ou même
une niche de Dieu qui nous servirait d’abri. Mais tout était trop grand
et trop ruiné. Nous trouvâmes une sorte de galerie de pierre que
nous suivîmes. La lune venait de se lever et nous permettait de ne
pas buter contre les racines qui fendaient parfois les dalles, ou de ne
pas tomber dans des excavations qui se creusaient subitement à
nos pieds.
Eva courait devant et je lui criais sans cesse de prendre garde.
Parfois se dressait un Bouddha énorme, un dragon aux formes
singulières. Il me semblait que j’étais halluciné. Et, tout d’un coup,
nous nous trouvâmes devant un large, un tournant, un prodigieux
escalier de pierre, encadré de bas-reliefs. Nous en descendîmes les
hautes marches pleins d’émotion et Eva me saisit la main, tellement
était impressionnant le lieu central dans lequel nous arrivâmes.
C’était une cour, une grande place circulaire, entourée par la
masse de l’édifice et où l’on parvenait par deux escaliers
monumentaux dont nous avions descendu le premier. Cette cour
était semée de colonnes renversées, de débris de statues. Nous y
avançâmes lentement, Eva et moi, épaule contre épaule et ne nous
lassant pas de regarder autour de nous, le monument qui devenait
plus haut, plus redoutable, plus mystérieusement muet, à mesure
que nous nous rapprochions du centre intérieur.
De tous les côtés se dressaient des entassements de corniches,
de pyramides, d’animaux sacrés entremêlés de ci de là de l’éventail
d’un palmier, du jet des bambous que la nature avait semés au
hasard pour se rire du symétrique effort des hommes. Et dans ces
architectures accumulées, il y avait d’innombrables reproductions de
bêtes géantes : des buffles de granit, des serpents de marbre
enroulés, des oiseaux fabuleux aux ailes déployées, en sorte que
dans la solitude de cette nuit lunaire notre asile était peuplé par les
images terrifiantes des bêtes que nous voulions fuir.
Ce lieu était cependant le plus sûr de ceux que nous pouvions
trouver. Je déblayai au pied d’une colonne un espace assez étendu,
je coupai des broussailles, j’en fis un tas et je l’allumai.
La flamme nous délivra de nos appréhensions. Elle me permit de
distinguer que la base de l’édifice formait une série de niches
régulières et que dans chaque niche il y avait un personnage humain
assis, un personnage gros et court avec un ventre épais et une tête
d’éléphant recouverte d’un bonnet pointu. Des centaines d’hommes
de pierre à tête d’éléphant étaient assis dans des centaines de
niches et nous considéraient silencieusement.
— C’est Ganésa, le Dieu de la sagesse, me dit Eva. Je ne suis
jamais venue dans ce temple qui est abandonné depuis des
centaines d’années. J’ai entendu parler de son existence. Nous nous
sommes éloignés beaucoup plus que nous ne l’avions supposé,
mais je me reconnais très bien maintenant.
Eva ne voulait pas renoncer au privilège de connaître les lieux où
elle nous avait égarés.
Elle s’était étendue à quelque distance du feu sur un amas de
branches de fougères et de feuilles sèches. Nous avions mangé des
mangues cueillies dans la forêt et bu du lait de noix de coco. Nous
fûmes envahis par le bien-être du repos physique et l’ivresse de
l’immobilité.
Nous commençâmes par jeter de fréquents regards aux deux
escaliers dont nous voyions les marches sombres se perdre dans
les hauteurs du monument. Je sentais qu’Eva imaginait, comme moi,
une lente descente du tigre monstrueux, se représentait ses yeux
phosphorescents fixés sur nous. Elle prenait alors une poignée de
branches et elle la jetait sur le feu pour que les flammes en montant
missent leur incendie flottant sur tout le cirque ténébreux.
Mais, peu à peu, cette obsession s’évanouit et elle fit place à un
bizarre attrait, une inexplicable attirance des formes obscures de la
pierre, attirance que je sentais matériellement et qui me donna deux
ou trois fois l’envie de courir vers les escaliers et de les gravir.
Naturellement, je résistai à cette envie.
Eva, au lieu de s’endormir, se dressa à plusieurs reprises sur son
séant comme si elle avait entendu un mystérieux appel, non pas un
appel venant de loin et qui aurait pu être les cris d’Ali ou de gens
partis à notre recherche, mais un appel proche, peut-être celui d’une
voix venant du mystère même des antiques pierres.
— N’avez-vous pas entendu ? me dit-elle tout bas, dressée et
anxieuse.
C’est ce mouvement qu’elle fit deux ou trois fois, ce mouvement
inexplicable pour écouter ce qui ne résonnait pas, qui fut la cause de
tout ce qui arriva.
Je jure que si elle s’était endormie paisiblement, pleine de
confiance, j’aurais veillé sur son sommeil jusqu’à l’aurore. Mais elle
se dressa, attentive, tout en me regardant du coin de l’œil avec des
paupières demi-fermées. Ses seins tendus apparurent sous sa veste
légère. Les épaules et le cou penchés en avant dans le mouvement
qu’elle fit pour écouter révélèrent un caractère animal que je voyais
pour la première fois. Il y avait dans toute la silhouette de son corps
un je ne sais quoi de mouvant, d’inquiétant et de voluptueux.
Plus je me rappelle cette heure et plus je suis persuadé qu’il
venait vers nous de la profonde forêt la hantise de la bestialité
multiforme dont elle est le repaire ancestral.
Le cri des chacals, l’appel des oiseaux de nuit se répondant les
uns aux autres, formaient un langage insensé qui donnait presque
l’envie de marcher à quatre pattes, de ramper comme les serpents,
de hurler comme les loups, de pousser des cris gutturaux et
prolongés comme les hiboux nocturnes.
Le parfait équilibre de mes facultés m’empêchait de me livrer à
ces folies. Mais je me surpris à me dandiner de droite et de gauche
comme un ours, et Eva, dressée devant moi, eut tout à coup un
autre aspect.
Je voyais à la clarté du feu ses narines frémir, ses seins monter
et descendre. Sa bouche était plus rouge et me fit l’effet d’un peu de
sang que je devais boire. Il me venait d’elle une tiédeur de corps
humain plus enivrante que tous les parfums terrestres sortant des
innombrables cassolettes des plantes et des fleurs.
Il y avait, dans sa manière de tendre le buste, une envie secrète
d’être renversée, une offrande de sa peau bleuâtre. Son visage
changea tout d’un coup d’expression, ses yeux perdirent leur
lumière, le sang de ses lèvres palpita. L’esprit sembla la quitter en
même temps que je le sentais disparaître de ma propre face. Nous
ne fûmes plus à cette minute, que deux animaux, se flairant, se
repoussant et se désirant.
C’est alors que je m’élançai sur elle. Cette attaque lui rendit-elle
la raison ou la lui fit-elle perdre au contraire ? Je ne peux le savoir, je
ne le saurai jamais. Je devais être hideux. Elle me repoussa avec
force. Je voulus la saisir à nouveau, mais je ne pris que sa veste qui
se déchira en même temps que sa chemise, dans le mouvement en
arrière qu’elle fit. Cela découvrit son épaule et un de ses seins.
Que se passa-t-il alors dans l’âme d’Eva ? L’homme qu’elle
aimait — car je suis persuadé qu’elle m’aimait, bien que je n’en aie
jamais eu aucune preuve — lui parut-il plus redoutable que la forêt
avec tous ses dangers ? Sa raison avait-elle été altérée par la
crainte ? Entendait-elle une voix occulte l’appeler ? Y avait-il une
influence magique dans ce temple abandonné ?
Je ne sais. Possédée soudain par une inconcevable légèreté,
Eva s’élança à travers la cour, elle gravit un des deux escaliers
monumentaux et disparut à mes yeux.
J’étais persuadé qu’elle s’était assise au haut des marches. Déjà,
confus de mon action, je l’appelai à plusieurs reprises en lui
demandant pardon. Comme je n’obtenais pas de réponse, je gravis
l’escalier tout en lui rappelant qu’il était dangereux de s’éloigner du
feu et en lui jurant sur la tête de ma mère bien-aimée que je ne
recommencerais pas mon indigne tentative.
Ma surprise et ma perplexité furent grandes en ne la trouvant
pas. Je criai de toutes mes forces pour la faire revenir. Rien ne me
répondit. Alors, affolé, je me mis à courir sur le chemin de ronde qui
domine le temple. Je tombai dans des trous, j’escaladai des statues.
Je criais toujours.
Cela dura très longtemps. La lune disparut. Ma voix se brisa par
l’effort que je faisais et je cessai de pouvoir faire résonner le nom
d’Eva. Je la croyais toujours cachée et refusant de me répondre
pour me punir. Plusieurs fois je pensai qu’elle était retournée auprès
du feu et j’y revins pour repartir aussitôt et reprendre mes
recherches.
Enfin, après une éternité d’attente, pendant laquelle je maniais
machinalement les cendres du feu mort, j’aperçus, se découpant sur
un azur livide, des silhouettes de cocotiers. Brusquement une lueur
pourpre inonda le temple et je distinguai autour de moi tous les
Ganésa à tête d’éléphant, dans leur immobilité dérisoire, leur
indifférence abjecte, leur tristesse sans fin.
Eva n’était pas là. Je ne pouvais pas imaginer ce qu’elle était
devenue et sa pensée occupait toute mon âme. Aucun son ne sortait
plus de ma gorge épuisée.
Un grand vol d’oiseaux, dont je ne pus reconnaître l’espèce,
s’éleva sur ma droite et raya le ciel avec lenteur. J’eus une grande
sensation de froid physique et toute la terre m’apparut répugnante
comme une étendue de marécages, d’eaux stagnantes peuplées de
crocodiles.
Soudain, je me mis à tourner plusieurs fois, de plus en plus
rapidement, comme un cheval dans un cirque, entre les murailles du
temple, le long des figures muettes qui me tendaient inexorablement
leur trompe.
Puis, je gravis un des escaliers, je traversai le chemin de ronde,
je dégringolai parmi les murailles croulantes, les morceaux de
portiques, les dieux informes, les galeries à demi ensevelies et je
m’élançai droit devant moi dans la forêt.
LA DISPARITION D’EVA
Je dus courir très longtemps.

Plus je cherche à revivre par le souvenir cette fin de nuit dans le
temple de Ganésa, plus je suis persuadé que l’inquiétude et
l’absence de sommeil ne suffisent pas à expliquer cette pensée de
démence qui me força à courir, plus je suis persuadé aussi qu’il y eut
dans la fuite d’Eva une autre cause que la pudeur offensée ou la
crainte d’un homme amoureux se jetant sur elle.
J’avais dû heurter un tronc d’arbre, tomber et m’évanouir. Quand
je me réveillai, j’étais étendu sur le sol et je fus frappé tout d’abord
par la sensation d’une coiffure pesante qui encerclait mon crâne. Je
fis le geste de me découvrir ; mais j’étais nu-tête. J’avais seulement
sur le front une bosse énorme, presque pareille à une corne. J’étais
au milieu d’une clairière, sous une lumière assez vive et je calculai
que la journée devait être assez avancée.
Les événements qui s’étaient écoulés depuis la veille me
revinrent avec horreur, mais il m’apparurent comme reculés dans un
passé lointain.
Il y avait deux perroquets sur une branche qui, de temps en
temps, laissaient tomber quelques sons grotesques. Une espèce
d’antilope de petite taille montrait son museau frémissant parmi les
feuilles. Malgré mes préoccupations, mon instinct de chasseur me fit
regretter de ne pas avoir de fusil.
Je fis un grand effort pour atteindre ma montre. Elle était arrêtée.
Je m’aperçus que j’avais pris dans ma poche, en même temps
que ma montre, une poignée de fourmis. J’en avais un peu partout,
sur mes vêtements, et je les regardai longtemps courir en file le long
de mes jambes et de ma poitrine. J’étais ravagé par une sensation
de soif et je demeurais là pourtant, sans presque bouger, près des
perroquets et de l’antilope au milieu des fourmis, remettant à plus
tard le moment de l’action.
Et soudain, le museau disparut et il y eut un glissement rapide
parmi les feuilles. En même temps, les perroquets s’envolaient. Je
supposai aussitôt que les sens de ces animaux, plus subtils que les
miens, avaient eu la perception d’un danger. Lequel ? Je pensai tout
de suite au tigre.
Ce qui effrayait une antilope et des perroquets devait effrayer
aussi un homme épuisé qui avait une corne sur le front. Mais une
singulière apathie s’était emparée de moi. Je continuai à demeurer
sans mouvement.
Et alors, très loin, à travers les profondeurs de la forêt, très triste,
très déchirant, j’entendis un bruit qui grandissait. C’était quelque
chose d’analogue à ce que j’avais entendu dans mon enfance,
pendant certaines fêtes populaires de Singapour. Il y avait des tam-
tam, des gongs et parfois une salve de coups de fusil, puis un long
cri qui se prolongeait comme une mélopée aux notes désespérées.
Je compris tout de suite ce que c’était. On était à notre
recherche. Des hommes venaient de mon côté avec les armes et les
voix qui sont leur privilège béni. Mais certaines tristesses de
l’enfance sont si nostalgiques que tout ce qui les rappelle étreint
douloureusement le cœur. Le salut me venait avec un chant de foire,
une évocation de feu d’artifice et de port pavoisé par mille lanternes.
Je me levai sans enthousiasme.
Je retombai aussitôt, m’apercevant que j’avais le pied foulé.
Et alors, une heure interminable s’écoula, peut-être plusieurs
heures. Des oiseaux passent au-dessus de ma tête, des bêtes
fuient. Le cortège des sauveteurs avance lentement. Ils sont peu
éloignés maintenant. Mais je ne peux les appeler, ma voix est
toujours brisée et je suis incapable d’émettre un son.
Parfois il y a un silence. La mélopée meurt. On doit recharger les
fusils. Peut-être l’heure du retour a-t-elle sonné et ceux qui venaient
vers moi changent de direction ou s’en retournent en arrière.
L’attente est tellement longue que je m’y résigne presque.
Qu’ils repartent ! Je vais me coucher sous cet arbre et me
rendormir.
Et tout d’un coup je m’élance sur un pied, saisi par la frénésie de
retrouver mes semblables et je saute d’un arbre à l’autre m’appuyant
sur les troncs et faisant l’effort inutile d’articuler des cris d’appel.
Un grand fracas de gongs résonne à mes oreilles et je suis
soudain empoigné au milieu du corps par Ali le Macassar. Une
vingtaine de Javanais m’entourent et je vois leurs yeux fixés sur la
bosse de mon front.
— Eva ? dis-je aussitôt. Aucun son ne s’échappe de mes lèvres,
mais chacun comprend et a l’air de me poser la même question.
Eva, m’explique-t-on, n’a pas été retrouvée encore, mais peut-
être l’autre battue que dirige M. Varoga, de l’autre côté de la forêt, a-
t-elle pu la rejoindre et la ramener saine et sauve.
Si l’on songe à la prodigieuse agglomération de vie en

mouvement que renferme une forêt équatoriale il ne paraît pas
étonnant qu’un être humain puisse y disparaître sans laisser aucune
trace. L’on est même surpris qu’un être vivant puisse la traverser et
en ressortir sans avoir été désagrégé, assimilé, bu par les
tentacules, par les mandibules, par les pompes, par les milliers
d’organes animaux ou végétaux dont est recouvert ce corps
multiforme.
Si l’on tombe et si l’on perd connaissance, il faut un miracle pour
se réveiller vivant, miracle qui se produisit pour moi. Je l’attribue à
mon magnétisme de dompteur de bête qui dut, dans cette
circonstance, écarter les fauves.
Il y a les fourmis, il y a les termites qui, en quelques heures,
réduisent un corps à l’état de squelette d’une propreté parfaite. Il y a
les chacals qui sont avertis non seulement de la mort d’une créature,
ce qui pourrait être expliqué par l’odeur, mais de son état de
maladie, même de faiblesse ou de découragement.
Ils ne suivent pas le chasseur qui rentre chez lui tranquillement
par un sentier connu, tandis qu’ils viennent de tous les points de la
forêt derrière celui qui s’est égaré, comme s’ils avaient été informés
par quelque message occulte de son inquiétude.
Il y a les vautours pleins de patience qui guettent l’immobilité
définitive. Il y a les panthères et surtout les tigres qui provoquent
cette immobilité par la formidable massue de leur patte. Ceux-là
jettent, avec légèreté, la proie sur leurs épaules et ils l’emportent,
pour la casser et la dépecer à leur aise, dans d’inextricables fourrés,
dans des lieux inaccessibles aux pas des hommes où jamais on ne
les retrouve.
Il y a les tigres et dans la forêt de Mérapi il y avait surtout le
Tigre.
Personne n’en parla pendant les fébriles recherches de ces dix
terribles journées, de ces dix nuits qui furent sans sommeil, même
pour un tempérament comme le mien qui a reçu le don réparateur
de s’endormir avec facilité.
Chacun y pensa sans cesse et formula intérieurement l’horrible
hypothèse pour la rejeter aussitôt formulée. Mais je dois dire
qu’aucun indice matériel, aucune trace de lutte, aucun fragment de
robe déchirée ne put jamais donner corps à cette hypothèse.
Les ouvriers de l’indigoterie, les habitants des villages qui
dépendaient de M. Varoga et ceux des villages voisins se relayèrent
avec un dévouement parfait.
Le canon ne cessa de retentir. Le résident de Djokjokarta envoya
un officier et un détachement de soldats de la garnison hollandaise
pour multiplier les battues. Il vint lui-même, le quatrième jour, et je
fis, pour la centième fois, le récit de la fatale nuit, omettant
naturellement dans ce récit le mouvement d’animalité qui m’avait
jeté vers Eva, ma lutte avec elle, sa veste déchirée et son sein
découvert.
J’étais dévoré de remords. Mais chacun aime à se persuader de
ce qui lui est le plus commode. J’avais fortement enfoncé dans mon
cerveau l’idée que je n’étais pour rien dans la fuite insensée d’Eva.
Elle avait écouté à plusieurs reprises des appels venant on ne
sait d’où et que je n’avais pas entendus. C’était là la cause
mystérieuse du mal.
Je me donnais raison à moi-même en me rappelant les
coquetteries d’Eva. Une jeune fille qui s’est montrée délibérément à
demi-nue dans un costume de princesse, qui va voir un second de
navire dans son hôtel et sort de chez lui par une échelle, qui reçoit
un jeune Javanais, la nuit, dans sa propre chambre, ne peut être
effrayée par le désir d’un homme amoureux et par un sein dénudé
devant lui.
De toutes façons, je l’avais rappelée aussitôt en lui demandant
pardon. La cause de sa fuite ne pouvait être la crainte d’être prise
auprès du feu, sur les feuilles de fougère, par l’homme qu’elle aimait.
Il y avait une cause occulte, un mystère où quelque magie était
mêlée et j’attribuais, sans me l’expliquer, l’influence néfaste qui avait
agi sur Eva, aux figures animales de pierre, aux hommes à tête
d’éléphant du temple de Ganésa.
La douleur de M. Varoga était d’un ordre silencieux. Il avait vieilli
brusquement. Il répéta plusieurs fois quand je formulai devant lui
mes hypothèses :
— Ma fille était si bizarre !
Puis il haussa les épaules comme s’il venait d’entendre les
discours d’un homme borné.
Il passait son temps dans la forêt. Je suppose que le manque
d’opium contribuait à lui donner une étonnante fébrilité. Je voyais
qu’il se retenait sans cesse de se précipiter dans sa chambre pour
aller fumer. Deux ou trois planteurs de ses amis qui connaissaient
ses habitudes et qui savaient combien peut être dangereuse la
brusque privation d’opium, l’exhortèrent, à plusieurs reprises, devant
moi, à monter chez lui. Le tracé d’une carte hydrographique, lui
dirent-ils bienveillamment, serait un excellent dérivatif à sa douleur.
Il ne voulut pas. Il répondit qu’il ne s’était que trop occupé de
cartes et de canaux et qu’il avait délaissé sa fille. Il voulait dire par là
qu’il n’avait que trop fumé.

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Richard F.

Kahn: Collected Economic

Cover image: Terry Dean / Alamy Stock Photo

“A long-awaited second collection of Richard Kahn’s essays including his later

Part I Imperfect Competition 33

2 Imperfect Competition and the Marginal Principle 35

3 The Problem of Duopoly 51

4 Oxford Studies in the Price Mechanism 71

5 The Cambridge ‘Circus’ 87

6 Some Aspects of the Development of Keynes’s Thought 97

7 ‘The General Theory of Employment, Interest and Money’119

Part III International Money and Trade 161

8 International Regulation of Trade and Exchanges163

9 The International Monetary System179

10 Historical Origins of the International Monetary Fund191

Part IV Unemployment and Inflation 223

11 Unemployment as seen by the Keynesians225

12 Thoughts on the Behaviour of Wages and Monetarism241

13 Inflation—A Keynesian View253

List of Richard F. Kahn’s Publications261

We thank Prof. D. Papineau, Richard Kahn’s nephew and literary executor,

Maria Cristina Marcuzzo and Paolo Paesani

The first collection of Richard Kahn’s essays was published by Cambridge

© The Author(s), under exclusive license to Springer Nature 1

collected here, one of which hitherto unpublished in English,1 represent a

Competition Theory: Market Imperfections

Kahn’s role in the elaboration of the theory of imperfect competition,

Competition was about to be published, in February 1933, when Kahn

customers to competitors leads each firm to move along a flatter demand

A few years later, however, he decided to publish an article, “The Theory

end of 1938, “The Cambridge Research Scheme of the National Institute

The degree of monopoly is not “a thing in itself”. It depends on e.g. 1)

The opposition to the concept of the “degree of monopoly”, as developed

Employment Theory: The Keynesian Approach

election went off without a hitch; everyone recognised it as an exception-

As we know, in the General Theory Keynes accepted the traditional

The voluminous correspondence,23 in some cases unpublished, between

Again, Keynes accepted Kahn’s suggestion, as can be seen on compar-

more accurate and instructive, is no more than a development of the old”

International Money and Trade

In October 1941, Kahn moved to Cairo to take up a position first as

Analysis of Kahn’s views on these issues is enhanced with consideration

rates rationally—as in the original intentions of Bretton Woods, which

collective point of view, given that the individual pursuit of a hypothetical

Unemployment, Wages and Inflation

achieve price stability and Kahn’s recommendation to directly control the

over twenty-five years, money wages would grow in an uncontrollable way

extraordinarily generous in helping others and equally extraordinarily

Two obstacles must be overcome, if one wishes to explore Kahn’s indi-

Keynes, J. M. ([1923] 1971a). A Tract on Monetary Reform. As reprinted in

Marcuzzo, M. C. (2020a). Kalecki and Cambridge. Review of Political Economy,

Rosselli, A. (2017). Richard Kahn and the stabilization of commodity prices.

Imperfect Competition and the Marginal

Kahn, R. F. (1933). Hitherto unpublished

© The Author(s), under exclusive license to Springer Nature 35

branch of economics, dependent on an adequate supply of squared paper,

Tout ce qui arriva ensuite fut vertigineux. Je crois me souvenir

— Je me reconnais parfaitement, dit Eva, en voyant des débris

Je dus courir très longtemps.

Si l’on songe à la prodigieuse agglomération de vie en

You might also like

Part I Imperfect Competition 33

2 Imperfect Competition and the Marginal Principle 35

3 The Problem of Duopoly 51

4 Oxford Studies in the Price Mechanism 71

5 The Cambridge ‘Circus’ 87

6 Some Aspects of the Development of Keynes’s Thought 97

7 ‘The General Theory of Employment, Interest and Money’119

Part III International Money and Trade 161

8 International Regulation of Trade and Exchanges163

9 The International Monetary System179

10 Historical Origins of the International Monetary Fund191

Part IV Unemployment and Inflation 223

11 Unemployment as seen by the Keynesians225

12 Thoughts on the Behaviour of Wages and Monetarism241

13 Inflation—A Keynesian View253

List of Richard F. Kahn’s Publications261